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Kelsh Company has the following estimated costs for next year:
Direct materials $80,000
Indirect materials 8,000
Rent on factory equipment 20,000
Direct labor 35,000
Salary of production supervisor 60,000
Sales commissions 25,000
Depreciation on factory equipment 50,000
Advertising expense 40,000
Factory utilities 10,000
Problem 1: Kelsh estimates that 10,000 machine hours will be worked during the year. The overhead rate per machine hour will be (Hint: Choose which of the above costs are Overhead costs, add them together, and divide the total by 10,000)
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