1. Peart proposed a revised cost system where they first identify material-related overhead (the cost of receiving and handling material), and allocate that cost to each product line based on the cost of material. Second, he suggested that they measure set-up labor, remove it form total overhead, and assign it to each product line. Finally, he suggested that they substitute machine hours for labor dollars as the basis for allocating the remaining factory overhead. What is the material-related overhead rate under this system?

The question relates to Caress of Steel Machine case