Sandler Corporation bases its predetermined overhead rate on the estimated machi

Question

Sandler Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Data for the upcoming year appear below.

             Estimated machine hours                                        73,000                                                                                                         Estimated variable manufacturing overhead                                        $3.49                                        per machine hour                                        Estimated total fixed manufacturing overhead                                        $838,770                                                                                           

Explanation / Answer

Predetermined overhead rate = (838770/73000) + 3.49 = $14.98 per machine hour.

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