Miller Company expected to incur $ 15,000 in manufacturing overhead costs and use 6,000 machine hours for the year. Actual manufacturing overhead was $ 9,800 and the company used 6,300 machine hours.

a. Calculate the predetermined overhead allocation rate using machine hours as the allocation base.

Question

Business

Mcmillan

18 November, 15:57

Miller Company expected to incur $ 15,000 in manufacturing overhead costs and use 6,000 machine hours for the year. Actual manufacturing overhead was $ 9,800 and the company used 6,300 machine hours.

a. Calculate the predetermined overhead allocation rate using machine hours as the allocation base.

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Answers (1)

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Mckenna Murphy · Answer 1

The predetermined overhead allocation rate is $2.5 per machine hour

Explanation:

Predetermined overhead allocation rate is calculated by dividing the Expected overhead by the Expected level of activity on which the overhead is allocated. It is a rate at which the overhead is allocated to a product / project / department.

Predetermined overhead allocation rate = Expected overhead / Expected activity

Predetermined overhead allocation rate = Expected overhead / Expected machine hours

Predetermined overhead allocation rate = $15,000 / 6,000 machine hours

Predetermined overhead allocation rate = $2.5 per machine hour.

Miller Company expected to incur $ 15,000 in manufacturing overhead costs and use 6,000 machine hours for the year. Actual manufacturing overhead was $ 9,800 and the company used 6,300 machine hours.a. Calculate the predetermined overhead allocation rate using machine hours as the allocation base.