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:

Multiple Choice

$$6\mathrm{.}80$ per machine$-$hour

$$6\mathrm{.}00$ per machine$-$hour

$$3\mathrm{.}00$ per machine$-$hour

$$3\mathrm{.}40$ per machine$-$hour