Reamer Corporation Uses a Predetermined Overhead Rate Based on Machine-Hours

question 45

Multiple Choice

Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year: Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:

• A) $6.80 per machine-hour
• B) $6.00 per machine-hour
• C) $3.00 per machine-hour
• D) $3.40 per machine-hour

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Definitions:

Net Income

The residual income of a company after all expenses have been deducted from revenues.

Accounts

Financial records that track the financial transactions and positions of a business, including assets, liabilities, revenue, and expenses.

Balances

The amount of money or value remaining in financial accounts, such as in banking or accounting.

December 31

The last day of the year, commonly used as a cutoff date for accounting and financial reporting purposes.