Buker Corporation bases its predetermined overhead rate on t

Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 74,000 Estimated variable manufacturing overhead $7.67 per machine-hour Estimated total fixed manufacturing overhead $1,630,960 The predetermined overhead rate for the recently completed year was closest to:

Solution

Predetermine overhead rate = Estimated fixed manufacturing overhead/estimated machine hour+Estimated variable manufacturing overhead

= 1630960/74000+7.67

Predetermine overhead rate = $29.71 per machine hour

The predetermined overhead rate for the recently completed year was closest to: $29.71 per machine hour