Compute the predetermined overhead rate based on the followi

Compute the predetermined overhead rate based on the following data:

Estimated total overhead for the year           $500,000

Actual amount of overhead for the year          475,000

Estimated total machine hours for the year       25,000            

Actual total machine hours for the year             24,300

Solution

Pre-determined OH rate per Machine hour: Estimated Total overheads 500000 Divide: Estimated Machine hours 25000 Pre-determined OH rate per MH 20