Question

Thomlin Company forecasts that total overhead for the current year will be $14,076,000 with 153,000 total machine hours. Year to date, the actual overhead is $8,730,000, and the actual machine hours are 97,000 hours. The predetermined overhead rate based on machine hours is

Answer 1

To find the predetermined overhead rate, we need to divide the estimated total overhead by the estimated total machine hours:

predetermined overhead rate = total overhead / total machine hours

predetermined overhead rate = $14,076,000 / 153,000 hours

predetermined overhead rate = $91.70 per machine hour

So, the predetermined overhead rate based on machine hours is $91.70 per machine hour.