Question: Kelsh Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs

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

Direct materials $10,000

Direct labour 30,000

Sales commissions 40,000

Salary of production supervisor 20,000

Indirect materials 4,000

Advertising expenses 8,000

Rent on factory equipment 10,000

Kelsh estimates that 5,000 direct labour hours and 10,000 machine hours will be worked during the year. What will be the predetermined overhead rate per hour?

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