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"The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $15,500,000 and the actual machine hours are 220,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate

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Answer:

Estimated manufacturing overhead rate= $75 per machine-hour

Explanation:

Giving the following information:

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 and that total machine hours will be 200,000 hours.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Estimated manufacturing overhead rate= 15,000,000/200,000= $75 per machine-hour

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