Question: AZC Ltd needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost.

AZC Ltd needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months.

Refer to attachment.

Month Total Overhead Machine Hours Jan $6,288 1,980 Feb $6,460 2,090 Mar $5,987 1,745 Apr $5,506 1,560 May $6,032 1,865 Jun $6,341 2,012

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Answer To forecast the total overhead cost for the next fiscal year AZC Ltd can use the machine hours as the basis for estimating the overhead cost By analyzing the historical data provided we can calculate the average overhead cost per machine hour ... View full answer

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