Beaver Manufacturing expects to produce 20,000 units next year and has budgeted overhead for the year at $240,000. Over the past four years, Beaver Manufacturing produced the following number of units:Year 1 22,000 Year 2 17,000 Year 3 21,000 Year 4 20,000 Calculate the predetermined overhead rate that Beaver Manufacturing will apply if normal capacity is used. a. $10 b. $14 c. $15 d. $12

d. $12

Explanation:

Predetermined overhead rate is the rate at which the overhead is applied to an product, project and department. It is calculated using the estimated total overhead and estimated basis of overhead application like labor hours, machine hours etc.

Predetermined Overhead Rate = Budgeted overhead / Budgeted production

Predetermined Overhead Rate = $240,000 / 20,000

Predetermined Overhead Rate = $12 per unit

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