The Casual Furniture Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year:
Lumber .................................................................... $ 25,000
Paint ................................................................ 1,000
Glue ................................................................ 500
Wages - Assembly personnel ................................... 100,000
Wages - Plant supervisor ........................................ 40,000
Sales salaries ....................................................... 18,000
Depreciation - factory equipment ............................... 16,500
Depreciation - sales office equipment 10,000
Utilities, insurance, property taxes - factory ................... 12,000
Utilities, insurance, property taxes - sales office ............... 8,000
Advertising ........................................................... 15,000
Rent on factory building ............................................ 30,000
Total costs ...................................................... $276,000
The Casual Furniture Company estimates that 10,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be: