Redwood Industries forecasts that total overhead for the current year will be $18,000,000 and total machine hours will be 250,000 hours. However, the actual overhead is $9,000,000 and the actual machine hours are 120,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is the predetermined overhead rate? Select one: A) $72 per machine hour B) $75 per machine hour C) $80 per machine hour D) $90 per machine hour

Redwood Industries forecasts that total overhead for the current year will be $18,000,000 and total machine hours will be 250,000 hours. However, the actual overhead is $9,000,000 and the actual machine hours are 120,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is the predetermined overhead rate? Select one: A) $72 per machine hour B) $75 per machine hour C) $80 per machine hour D) $90 per machine hour

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 23Q: If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of...

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If a company bases its predetermined overhead rate on 100,000 machine hours, and It actually has 100,000 machine hours, would there be an under applied or over applied overhead?
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