Hairr Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing

question 87

Multiple Choice

Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, the predetermined overhead rate would be:

• A)$9.50
• B)$115.98
• C)$106.48
• D)$950.00

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Definitions:

Straight-Line Method

A method of calculating the depreciation of an asset, which allocates an equal amount of depreciation each year over its useful life.

Residual Value

The estimated amount that an asset is expected to realize upon its disposal at the end of its useful life.

Interest Incurred

The cost of borrowing money, often expressed as a rate, that accumulates over the loan period.

Grading Land

the process of leveling or sloping land to prepare it for construction, landscaping, or other uses, often reflected in property development costs.