Question: The controller for Tender Bird Poultry Inc estimates that the

The controller for Tender Bird Poultry, Inc. estimates that the company’s fixed overhead is $150,000 per year. She also has determined that the variable overhead is approximately $.15 per chicken raised and sold. Since the firm has a single product, overhead is applied on the basis of output units, chickens raised and sold.

1. Calculate the predetermined overhead rate under each of the following output predictions: 100,000 chickens, 200,000 chickens, and 300,000 chickens.
2. Does the predetermined overhead rate change in proportion to the change in predicted production? Why?

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  • CreatedApril 22, 2014
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