Reference no: EM132755118

Aztec Builders allocates manufacturing overhead to jobs based on machine hours. The company has the following estimated costs for the upcoming year:

Direct materials used                 $25,000
Direct labour costs                    $62,000
Salary of factory supervisor           $50,000
Advertising expense                       $33,000
Heating and lighting costs for factory  $33,000
Depreciation on factory equipment     $29,000
Sales commissions                                $8,000

Problem 1: The firm estimates that 1,800 direct labour hours will be worked in the upcoming year, while 2,000 machine hours will be used during the year. The predetermined indirect allocation rate per machine hour is closest to

a. $56.
b. $36.
c. $60.
d. $45.
e. $40.