Sky High Company Budgeted Indirect Cost Driver Rate Question
Calculation of Budgeted Indirect Cost Driver Rate for Department Y
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