For its inspecting cost pool, Ellis Company expected overhead cost of $45,150 and 2,150 inspections. The actual overhead cost for that cost pool was $36,120 for 1,935 inspections. Calculate the activity-based overhead rate used to assign costs to the inspecting cost pool.

Question

Business

Desirae Allen

14 April, 20:31

For its inspecting cost pool, Ellis Company expected overhead cost of $45,150 and 2,150 inspections. The actual overhead cost for that cost pool was $36,120 for 1,935 inspections. Calculate the activity-based overhead rate used to assign costs to the inspecting cost pool.

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Predetermined manufacturing overhead rate = $21 per inspections

Explanation:

Giving the following information:

For its inspecting cost pool, Ellis Company expected overhead cost of $45,150 and 2,150 inspections.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Predetermined manufacturing overhead rate = 45,150/2,150

Predetermined manufacturing overhead rate = $21 per inspections