The Harold Company forecasts that total overhead for the current year will be $12,000,000 and total machine hours will be 200,000 hours.However,the actual overhead is $4,000,000 and the actual machine hours are 100,000 hours.If the company uses a predetermined overhead rate based on machine hours for applying overhead,the overhead will be:

Question

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The predetermined overhead rate is $12,000,000 / 200,000 hours = $60 per hour. The actual overhead is $4,000,000 and the actual machine hours are 100,000 hours. So the overhead is overapplied by $60 per hour x 100,000 hours = $2,000,000.

The Harold Company Forecasts That Total Overhead for the Current