Reference no: EM13860301

Continental Company manufactures high quality custom-made furniture. The company has a perpetual inventory system, and uses normal costing in conjunction with job-order costing. Manufacturing overhead is being applied during calendar year 2015 on a plant-wide basis using direct materials cost as the allocation base.

Inventory balances on September 1, 2015 were: Direct Materials Inventory, $6,000; Work in Process Inventory, $41,900; and Finished Goods Inventory, $12,000. Job 115 was the only job in finished goods on September 1. Only two jobs, Job 120 and Job 121, were in process on September 1 (both jobs had been started in August). Prior to September 1, Job 120 had been assigned $9,000 in direct materials and $8,000 in direct labor, and Job 121 had been assigned $6,000 in direct materials and $7,000 in direct labor. During September, Job 122 was started in process.

Material requisition forms indicated that the total cost of direct materials used during September was $19,000, of which $4,000 related to Job 120, $7,500 related to Job 121, and the remainder related to Job 122. Employee time sheets indicated that total direct labor cost incurred during September (all accrued) was $27,000, of which $3,000 related to Job 120, $14,000 related to Job 121, and the remainder related to Job 122. The company incurred and paid $8,000 of indirect labor cost and $2,500 of shipping (to customers) cost during September. Job 115 was sold during September at a price of cost plus 60 percent. Job 121 was completed during September, but was unsold as of the end of the month. Jobs 120 and 122 were still in process on September 30.

What is the predetermined overhead rate?