Horton Industries Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials$10,000 Direct labor$30,000 Sales commissions$40,000 Salary of production supervisor$20,000 Indirect materials$4,000 Advertising expense$8,000 Rent on factory equipment$10,000 Horton estimates that 5,000 direct labor-hours and 10,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:
A. $6.80.
B. $6.40.
C. $8.20.
D. $3.40.
Answer: D
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