Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

A) $37.09 per machine-hour

B) $36.07 per machine-hour

C) $7.38 per machine-hour

D) $29.71 per machine-hour

Question

Business

Lindsay Rollins

2 October, 13:36

Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

A) $37.09 per machine-hour

B) $36.07 per machine-hour

C) $7.38 per machine-hour

D) $29.71 per machine-hour

+1

Answers (1)

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Hubbard · Answer 1

The correct answer is A.

Explanation:

Giving the following information:

The estimated machine-hours for the upcoming year at 79,000 machine-hours.

The estimated variable manufacturing overhead was $7.38 per machine-hour

The estimated total fixed manufacturing overhead was $2,347,090.

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

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

Estimated manufacturing overhead rate = 2,347,090/79,000 + 7.38 = $37.09 per machine-hour