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Norwall Company's variable manufacturing overhead should be 3.00 per standard machine hour and its fixed manufacturing overhead should be 300,000 per period
The predetermined overhead rate based on machine hours is calculated below:
Budgeted fixed manufacturing overhead
+Budgeted variable manufacturing overhead)
Predetermined overhead rate =
Machine hours
$300,000+ ($3×60,000)
60,000
= $300,000 +$180,000
60,000
$480,000 60,000= $8 per machine hour
The variable predetermined overhead rate based on machine hours is calculated below:
Predetermined overhead rate (variable) = = Budgeted variable manufacturing overhead
Machine hours
($3×60,000) 60,000
$180,000 60,000 =$3 per machine hour
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