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 $3 per hour.

Question

Quizplus · Accepted Answer

The plantwide factory overhead rate is calculated by dividing the total budgeted factory overhead cost by the total budgeted machine hours. $600,000 / 100,000 hours = $6 per hour, not $3 per hour.

Zorn Co Budgeted $600,000 of Factory Overhead Cost for the Coming