Strong Company Applies Overhead Based on Machine Hours

Multiple Choice

Strong Company applies overhead based on machine hours. At the beginning of 20x1, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 20x1 year-end, actual overhead totaled $525,000, and actual machine hours were 25,000. On the basis of this information, the 20x1 predetermined overhead rate was:

A) $0.04 per machine hour.
B) $0.05 per machine hour.
C) $20 per machine hour.
D) $21 per machine hour.
E) $25 per machine hour.