To calculate the predetermined overhead rate, we use the following formula:

$\text{Predetermined Overhead Rate} = \frac{\text{Estimated Total Manufacturing Overhead}}{\text{Estimated Total Machine-Hours}}$

Where:

1. Estimated Total Manufacturing Overhead is the sum of estimated fixed manufacturing overhead and estimated variable manufacturing overhead.
2. Estimated Variable Manufacturing Overhead per machine-hour is given as $3.40.
3. Estimated Total Fixed Manufacturing Overhead is given as $838,760.
4. Estimated Machine-Hours is 72,100.

Let's calculate step by step:

1. Calculate the Estimated Total Variable Manufacturing Overhead:

$\text{Estimated Variable Manufacturing Overhead} = \text{Variable Overhead Rate} \times \text{Estimated Machine-Hours}$ $= 3.40 \times 72,100 = 245,140$

2. Calculate the Estimated Total Manufacturing Overhead:

$\text{Estimated Total Manufacturing Overhead} = \text{Fixed Overhead} + \text{Variable Overhead}$ $= 838,760 + 245,140 = 1,083,900$

3. Calculate the Predetermined Overhead Rate:

$\text{Predetermined Overhead Rate} = \frac{1,083,900}{72,100} \approx 15.04 \, \text{per machine-hour}$

The predetermined overhead rate for the recently completed year was closest to $15.04 per machine-hour.

Would you like a deeper explanation or have any other questions?

Here are 5 related questions to think about:

1. How would the predetermined overhead rate change if machine-hours were underestimated?
2. Why is it important for companies to establish a predetermined overhead rate?
3. What effect does fixed overhead have on the overall overhead rate compared to variable overhead?
4. How can a company adjust its predetermined overhead rate if actual hours differ significantly from estimated hours?
5. How would overhead costs be allocated if both labor-hours and machine-hours were considered?

Tip: Always compare estimated values to actual outcomes to adjust overhead rates for future planning.