Zorn Co.budgeted $600,000 of factory overhead cost for the coming year.Its plantwide allocation base,machine hours,is budgeted at 100,000 hours.Budgeted units to be produced are 200,000 units.Zorn's plantwide factory overhead rate is $6.00 per unit.

Question

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Zorn's plantwide factory overhead rate is calculated based on machine hours, not per unit. The rate is $600,000 / 100,000 hours = $6.00 per machine hour.

Zorn CoBudgeted $600,000 of Factory Overhead Cost for the Coming Year