Infotrac Inc. sells a high-speed retrieval system for information. It provides the following information for the year.

Overhead is applied on the basis of machine hours.
(a) Calculate the predetermined overhead rate.
(b) Determine the amount of overhead applied for the year.
(c) Explain how an activity-based costing system might differ in terms of calculating a predetermined overhead rate.

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BudgetedActual Overhead cost Machine hours Direct labour hours $1,000,000 $950,000 45,000 92,000 50,000 100,000