Reference no: EM132175062
Question - Salmon Company uses a pre-determined overhead rate based on machine hours to apply overhead costs to jobs. At the beginning of 2019, the company estimated the following costs would be incurred:
Direct materials $70,000
Direct labor 90,000
Advertising expense 20,000
Utilities 16,000
Rent on factory building 35,000
Maintenance on factory equipment 29,000
Depreciation on factory equipment 12,000
Indirect materials 25,000
Sales commissions 39,000
Production supervisor's salary 41,000
70% of the utilities relate to the factory while 30% of the utilities relate to the administrative office buildings.
Salmon Company estimates that 8,000 machine hours will be used during 2019.
Calculate Salmon Company's pre-determined overhead rate based on machine hours.