The Anderson Company Forecasts That Total Overhead for the Current

question 93

Multiple Choice

The Anderson Company forecasts that total overhead for the current year will be $15,000,000 and total machine hours will be 200,000 hours.However,the actual overhead is $8,000,000 and the actual machine hours are 100,000 hours.If the company uses a predetermined overhead rate based on machine hours for applying overhead,what is predetermined overhead rate?

• A)$80 per machine hour
• B)$150 per machine hour
• C)$75 per machine hour
• D)$40 per machine hour

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Definitions:

Standard Hourly Rate

A predetermined amount paid or charged per hour, often used to calculate labor costs in manufacturing or services.

Labor Efficiency Variance

The difference between the actual hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly labor rate.

Labor Time

The duration of time workers spend in the process of producing goods or providing services.

Standard Quantity

The expected quantity of materials or labor hours needed to produce a unit of product, set during the budgeting or planning process.