Sky High Company Budgeted Indirect Cost Driver Rate Question

Calculation of Budgeted Indirect Cost Driver Rate for Department Y

Answer:

Predetermined manufacturing overhead rate = $9.8 per machine hour

Explanation:

Given the following information: Machine-hours = 50,000, Manufacturing overhead = $490,000

To calculate the predetermined manufacturing overhead rate, we use the formula: Predetermined manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Predetermined manufacturing overhead rate = $490,000 / 50,000 = $9.8 per machine hour

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