Dallman Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on 70,000 machine-hours, total fixed manufacturing overhead cost of $287,000, and a variable manufacturing overhead rate of $3.50 per machine-hour.Required:a. Calculate the estimated total manufacturing overhead for the year.b. Calculate the predetermined overhead rate for the year.
What will be an ideal response?
a. Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $287,000 + ($3.50 per machine-hour × 70,000 machine-hours) = $287,000 + $245,000 = $532,000
b. Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $532,000 ÷ 70,000 machine-hours = $7.60 per machine-hour
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