Hykes Corporation's manufacturing overhead includes $4.40 per machine-hour for supplies; $4.40 per machine-hour for indirect labor; $55,800 per period for salaries; and $58,590 per period for depreciation.Required:Determine the predetermined overhead rate if the denominator level of activity is 3,100 machine-hours.
What will be an ideal response?
Estimated total manufacturing overhead cost = [($4.40 per MH + $4.40 per MH) × 3,100 MHs] + ($55,800 + $58,590) = $27,280 + $114,390 = $141,670
Predetermined overhead rate = Estimated total manufacturing overhead cost/Estimated total amount of the allocation base = $141,670 ÷ 3,100 machine-hours = $45.70 per machine-hour
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