The controller for Tender Bird Poultry, Inc. estimates that the companys fixed overhead is $100,000 per year. She also has determined that the variable overhead is approximately $0.20 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.

Exercise 3-24 Part 1

Required:

1. Calculate the predetermined overhead rate under each of the following output predictions: (Round your answers to 2 decimal places.)

2. Does the predetermined overhead rate change in proportion to the change in predicted production?

• Yes

• No

Overhead Rate Volumes 200,000 300,000 per chicken per chicken 400,000 per chicken