Global Quality Ltd produces two types of embossing machines, a standard model and a deluxe model. The budgeted factory overhead costs for the production operation during 2025 are as follows.

Production of 18  000 standard machines and 12  000 deluxe machines is budgeted for 2025. Each standard machine requires 2.5 machine hours, and each deluxe machine requires only 2 machine hours because of the use of component parts. The company expects to sell all machines produced.
Required

(a) Prepare a factory overhead budget for 2025 based on the estimated production level.

(b) Calculate the predetermined overhead rate based on machine hours.

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Variable costs: Indirect materials Indirect labour Electricity Other Fixed costs: Production manager's salary Depreciation Insurance Miscellaneous $8.00 per machine hour 0.60 per machine hour 0.20 per machine hour 0.20 per machine hour $120 000 46 000 32 000 13 200