Biology Forums - Study Force

Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year:

Direct materials	$ 1,000
Direct labor	$ 3,000
Sales commissions	$ 4,000
Salary of production supervisor	$ 2,000
Indirect materials	$ 400
Advertising expense	$ 800
Rent on factory equipment	$ 1,000

Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:

▸ $6.80 per machine-hour

▸ $6.00 per machine-hour

▸ $3.00 per machine-hour

▸ $3.40 per machine-hour

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