Asked by Evlyn Torgerson on May 30, 2024
Verified
Lightner Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:
Required:Compute the company's predetermined overhead rate.
Predetermined Overhead Rate
A rate calculated before the period begins, based on the estimated overhead costs and estimated activity base, used to allocate overhead costs to products.
Machine-Hours
An indicator of how much output is generated in manufacturing, determined by the total hours that machinery is in use.
- Understand the strategy for calculating predetermined overhead rates by means of different allocation standards, including machine-hours, labor-hours, and capacity.
Verified Answer
TC
Tanner CereghinoMay 30, 2024
Final Answer :
Estimated total manufacturing overhead = $1,077,000 + ($8.82 per machine-hour × 50,000 machine-hours) = $1,518,000Predetermined overhead rate = $1,518,000 ÷ 50,000 machine-hours = $30.36 per machine-hour
Learning Objectives
- Understand the strategy for calculating predetermined overhead rates by means of different allocation standards, including machine-hours, labor-hours, and capacity.
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