Zorn Co. budgeted $300,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 50,000 hours. Budgeted units to be produced are 100,000 units. Zorn's plantwide factory overhead rate is $6.00 per machine hour.

Question

Quizplus · Accepted Answer

The plantwide factory overhead rate is calculated as follows:

Plantwide factory overhead rate = Budgeted factory overhead costs ÷ Budgeted allocation base

= $300,000 ÷ 50,000 machine hours

= $6.00 per machine hour

Therefore, the statement is true.

Zorn Co Budgeted $300,000 of Factory Overhead Cost for the Coming