Steele Company Uses a Predetermined Overhead Rate Based on Machine

Multiple Choice

Steele Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. Steele Company has provided the following estimated costs for next year. $\begin{array}{lrr} \text { Direct materials. } &£ 20,000\\ \text { Direct Labour } &60,000\\ \text { Sales commissions } &80,000\\ \text {Salary of production supenisor } &40,000\\ \text { Indirect materials } &8,000\\ \text { Advertising expense } &16,000\\ \text { Rent on factory equipment } &20,000\end{array}$

Steele estimates that 10,000 direct Labour hours and 16,000 machine hours will be worked during the year. The predetermined overhead rate per hour will be:

A) £4.25.
B) £8.00.
C) £9.00.
D) £10.25.