Washburn Co produces buds During the year manufacturing over

Washburn Co. produces buds. During the year, manufacturing overhead costs are expected to be $2000,000. Expected machine usage is 2,500 hrs. The company assigns overhead based on machine hrs. Job no.551 used 90 machine hrs
Compute the predetermined overhead rate.

Solution

Predetermined Overhead Rate = Expected Manufacturing Overhead Cost / Expected Machine Hours

= $ 2,000,000/ 2,500 Hours

= $ 800

Hence the correct answer is $ 800 per machine hour.