Question

The Thomlin Company estimates that total overhead for the current year will be $16,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $16,500,000 and the actual machine hours are 220,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate __________

a. $75 per machine hour
b. $73 per machine hour
c. $83 per machine hour
d. $80 per machine hour

Answer 1

The correct answer is D.

Step-by-step explanation:

Giving the following information:

The Thomlin Company estimates that total overhead for the current year will be $16,000,000 and that total machine hours will be 200,000 hours.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 16,000,000/200,000= $80 per machine hour