Question

The Bolen Company forecasts that total overhead for the current year will be $8,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $10,000,000 and the actual machine hours are 80,000 hours. If the Bolen Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate?

Answer 1

Answer:

Estimated manufacturing overhead rate= $40 per machine hour

Explanation:

Giving the following information:

The Bolen Company forecasts that total overhead for the current year will be $8,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $10,000,000 and the actual machine hours are 80,000 hours.

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

Estimated manufacturing overhead rate= 8,000,000/200,000= $40 per machine hour