Horton Industries Company Uses a Predetermined Overhead Rate Based on Machine-Hours

Multiple Choice

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: 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:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 10,000 \\\hline \text { Direct labor } & \$ 30,000 \\\hline \text { Sales commissions } & \$ 40,000 \\\hline \text { Salary of production supervisor } & \$ 20,000 \\\hline \text { Indirect materials } & \$ 4,000 \\\hline \text { Advertising expense } & \$ 8,000 \\\hline \text { Rent on factory equipment } & \$ 10,000 \\\hline\end{array}$$

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