Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year: Direct materials$1,000Direct labor$3,000Sales commissions$4,000Salary of production supervisor$2,000Indirect materials$400Advertising expense$800Rent on factory equipment$1,000 Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:
A. $3.00 per machine-hour
B. $6.80 per machine-hour
C. $3.40 per machine-hour
D. $6.00 per machine-hour
Answer: C
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