Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Direct materials$6,000Direct labor$20,000Rent on factory building$15,000Sales salaries$25,000Depreciation on factory equipment$8,000Indirect labor$12,000Production supervisor's salary$15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:
A. $2.50 per direct labor-hour
B. $4.00 per direct labor-hour
C. $2.79 per direct labor-hour
D. $3.00 per direct labor-hour
Answer: A
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