Kelsh Company Uses a Predetermined Overhead Rate Based on Machine

Multiple Choice

Kelsh 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:
$\begin{array}{|l|r|}\hline \text { Direct materials } & \$ 10,000 \\\hline \text { Direct labour } & 30,000 \\\hline \text { Sales commissions } & 40,000 \\\hline \text { Salary of production supervisor } & 20,000 \\\hline \text { Indirect materials } & 4,000 \\\hline \text { Advertising expenses } & 8,000 \\\hline \text { Rent on factory equipment } & 10,000 \\\hline\end{array}$
Kelsh estimates that 5,000 direct labour hours and 10,000 machine hours will be worked during the year.What will be the predetermined overhead rate per hour?

A) $6.80.
B) $6.40.
C) $3.40.
D) $8.20.