Baj Corporation Uses a Predetermined Overhead Rate Base on Machine-Hours

question 233

Multiple Choice

Baj Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year.The company has provided the following data for the most recent year. The predetermined overhead rate per machine-hour would be closest to:

• A) $17.80
• B) $19.49
• C) $16.23
• D) $17.77

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Definitions:

Amortization

The method of slowly amortizing the initial expense of a non-physical asset over the period it is expected to be used.

Units-Of-Output Method

A depreciation method where the expense is based on the actual output or usage of the asset, rather than the passage of time.

Double-Declining-Balance Method

A method of accelerated depreciation that doubles the straight-line depreciation rate, leading to higher depreciation expenses in the initial years of asset use.

Straight-Line Method

A method of allocating the cost of a tangible asset over its useful life in equal periodic amounts.