The Little Britain Company Applies Overhead Cost Based on Machine

Multiple Choice

The Little Britain Company applies overhead cost based on machine hours. At the beginning of 2011, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 2011 year-end, actual overhead totalled $525,000, and actual machine hours were 25,000. On the basis of this information, the 2011 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.