The Thomlin Company estimates that total overhead for the current year will be $

Question

The Thomlin Company estimates that total overhead for the current year will be $17,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $17,500,000 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?

Question 11 options:

$88 per machine hour

$77 per machine hour

$85 per machine hour

$80 per machine hour

$88 per machine hour

$77 per machine hour

$85 per machine hour

$80 per machine hour

Explanation / Answer

predetermined overhead rate = Estimated total overhead / Estimated total machine hour

= $ 17,000,000 /  220,000 hours

= $ 85 per machine hour

Hence the correct answer is $ 85 per machine hour

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