Holley Inc. uses a normal cost system that applies overhead based on machine hours. The following budgeted data are available for the year:

Practical capacity is 118,000 machine hours; expected capacity is 75 percent of practical.

a. What is the company's predetermined VOH rate?

b. What is the predetermined FOH rate using practical capacity?

c. What is the predetermined FOH rate using expected capacity?

d. During the year, the firm records 85,000 machine hours and \(\$ 1,500,000\) of overhead costs, How much variable overhead is applied? How much fixed overhead is applied using the rate found in (b)? How much fixed overhead is applied using the rate found in (c)? Calculate the total underapplied or overapplied overhead for the year using both fixed \(\mathrm{OH}\) rates.

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Variable factory overhead at 50,000 machine hours. $400,000 Variable factory overhead at 90,000 machine hours... 720,000 Fixed factory overhead at all levels between 20,000 and 118,000 machine hours .. 531,000