Fell Corporation manufactures computers. Assume that Fell, allocates manufacturing overhead based on machine hours estimated 12, 000 machine hours and $93, 000 of manufacturing overhead costs actually used 15, 000 machine hours and incurred the following actual costs: (Click the icon to view the actual costs.) What is Fell’s predetermined overhead allocation rate? A. $5.20/machine hour B. $6.50/machine hour C. $6.20/machine hour D. $7.75/machine hour
Answer is D
Predetermined Overhead Rate = Budgeted Expense / Budgeted Machine Hours
= 93000 / 12000
= 7.75 Per Machine Hour
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