Thomlin Company Forecasts That Total Overhead for the Current Year

question 178

Multiple Choice

Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000, and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is

• A) $48 per machine hour
• B) $62 per machine hour
• C) $45 per machine hour
• D) $50 per machine hour

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Definitions:

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, typically not reflected in the market price, like vaccination.

Government Agency

A permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions.

Negative Externality

A cost that affects a party who did not choose to incur that cost, typically resulting from economic activity by another party.

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both private costs and external effects.