Hi Can you help me understand how to do this Calculate Paulson Company's pre-determined overhead rate based on machine hour.
Paulson Company had the following estimated costs for 2019:
Direct materials .................... $28,000
Direct labor ........................ 22,000
Advertising expense ................. 15,000
Rent on factory building ............ 13,500
Depreciation on factory equipment ... 6,500
Indirect materials .................. 10,000
Sales commissions ................... 28,000
Production supervisor's salary ...... 40,000
Insurance on equipment .............. 15,000
It is known that 40% of the insurance relates to equipment in the administrative offices while 60% of the insurance relates to equipment in the factory.
Paulson Company estimates that 25,000 machine hours will be used during 2019.
Calculate Paulson Company's pre-determined overhead rate based on machine hours. List your answer with two places after the decimal point (i.e., $7.60).