Perfect Printers Ltd provides high volume offset colour and black and white printing for newspapers. It applies factory overhead to jobs on the basis of machine hours. The budgeted fixed overhead consists of $54 000 managers salary, depreciation of $27 464 and rent of $45 000. The remainder is variable overhead made up of the following items:

Indirect labour	$2.75
Indirect materials	$5.00
Electricity	$1.50
Repairs and maintenance	$0.75

This year Perfect Printers is printing two weekly papers — The Barrington Press and Hanmer Herald. The Barrington Press is printed in full colour while the Hanmer Herald is a black and white publication. Consequently, the Barrington Press requires additional time on the printing press. Perfect Printers has two industrial offset printing machines. Each machine operates 64 hours per week and there are 52 weeks in the year. All the machines hours are utilised to produce the two newspapers.

Required

A. Prepare a factory overhead budget for 2017 based on the estimated production level.

B. Calculate the predetermined overhead rate based on machine hours.