Problem:
My 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 the next year:
Direct materials...$5,000
Direct labor...$19,000
Rent of factory building...$16,000
Sales salaries...$24,000
Depreciation on factory equipment...$7,000
Indirect labor...$11,000
Production supervisor's salary...$14,000
We estimate that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be: