ear 2017 are as folows verhead Cost Pools 73900 Hancling mat

ear 2017 are as folows verhead Cost Pools 73,900 Hancling materials Production (cutting, milling, firishing) Setting up machines 108,000 Inventory control (raw materials and firished goods) Total budgsted overhead cot: For the st 4 ycars, Shalr Stairs Co. ha: been charging ovcrhcad to products on the bas of machina hours. For the year 2017, 100,000 machinc hours are budgsted. leremy Nolan, aaner-manager of Shaker Stairs Co, recently drected his accountant, Bill Seagren, to implement the activity-based casting system that he has repeatedly propased. Army Nclan\'s request, Dill and the preduction oreman identiy the felloning cost drivers and their usage for the previausly budked overead ol puu: Expected use of Activity Coct Pools Coct Drvers Number of orders Number of moves cirect labor hours Number of setups Number of inspections Number of compenents Square feet occupie:d Hancling materials Production (cutting, milling, firishing) Setting up machines 100,000 Inventory control (raw materials and firished goods) Steve Hannon. sses rmanager, has rece ec an or c or 2gO st?rways om com muity Buldars. He accumulates the following data for the procuction of 250 stalrways. Cirect materials Cirect labor Matine haurs Ciret laber hours Number of purchase orders Number of materisl moves Number of machine setus Number of inspectios Number of compenents Number of square feet ocupied u cerz Inc., a large housing ceve opment contractor. At Steves e ues Bll prepare cost estimates or producing components or 253 star ay: so s eve can subm ? contract pnce per sair ay to Community $104,000 $112400 16,000

Solution

Calculate predetermine overhead rate :

Predetermine overhead rate = Estimated overhead cost/Estimated machine hour

                                               = 1068900/100000

Predetermine overhead rate = 10.69 per machine hour