Trust Company applies overhead based on direct labor hours.At the beginning of the year, Trust estimates overhead to be $700,000, machine hours to be 200,000, and direct labor hours to be 35,000.During February, Trust has 5,000 direct labor hours and 10,000 machine hours.
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What is the predetermined overhead rate?
A) $15.00 per machine hour
B) $14.00 per direct labor hour
C) $20.00 per direct labor hour
D) $18.00 per machine hour
E) None of these are correct.

Question

Trust Company applies overhead based on direct labor hours.At the beginning of the year, Trust estimates overhead to be $700,000, machine hours to be 200,000, and direct labor hours to be 35,000.During February, Trust has 5,000 direct labor hours and 10,000 machine hours. 
-
What is the predetermined overhead rate?
A) $15.00 per machine hour
B) $14.00 per direct labor hour
C) $20.00 per direct labor hour
D) $18.00 per machine hour
E) None of these are correct.

Quizplus · Accepted Answer

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Trust Company Applies Overhead Based on Direct Labor Hours