he Thomlin Company forecasts that total overhead for the cur

he Thomlin Company forecasts that total overhead for the current year will be $15,000,000 and that total machine hours will be 300,000 hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate?

Solution

The \"predetermined overhead rate\"(PDOR) is the (total overhead cost) / (total machine hours) as forecasted by the company

So,

PDOR = 15,000,000 dollars / 300,000 machine hrs

PDOR = 150/3

PDOR = 50 dollars per machine hour ---> ANSWER