Question

Thomlin Company forecasts that total overhead for the current year will be $11,667,000 with 168,000 total machine hours. Year to date, the actual overhead is $7,895,000 and the actual machine hours are 91,000 hours. The predetermined overhead rate based on machine hours is Round the factory overhead rate to the nearest dollar before multiplying by the number of hours. a.$87 per machine hour b.$47 per machine hour c.$69 per machine hour d.$128 per machine hour

Answer 1

Answer: c.$69 per machine hour

Explanation:

The predetermined overhead rate is the rate that the company forecasted that overhead would cost per hour.

Thomlin Company forecasted that total overhead for the current year will be $11,667,000 with 168,000 total machine hours.

The Predetermined Overhead rate would therefore be,

= Total Forecasted Overhead / Machine Hour

= 11,667,000 / 168,000

= $69.44

= $69

This means that the forecast was that for every Machine Hour, overhead accrued was $69.