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6 June, 16:54

For its inspecting cost pool, Ellis Company expected overhead cost of $45,150 and 2,150 inspections. The actual overhead cost for that cost pool was $36,120 for 1,935 inspections. Calculate the activity-based overhead rate used to assign costs to the inspecting cost pool.

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  1. 6 June, 17:05
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    Predetermined manufacturing overhead rate = $21 per inspections

    Explanation:

    Giving the following information:

    For its inspecting cost pool, Ellis Company expected overhead cost of $45,150 and 2,150 inspections.

    To calculate the predetermined manufacturing overhead rate we need to use the following formula:

    Predetermined manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Predetermined manufacturing overhead rate = 45,150/2,150

    Predetermined manufacturing overhead rate = $21 per inspections
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