Paulson Company Uses a Predetermined Overhead Rate Based on Machine

Multiple Choice

Paulson 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:
Paulson estimated that 40,000 direct Labour hours and 20,000 machine hours would be worked during the year.
The predetermined overhead rate per machine hour will be:
$\begin{array}{lrr} \text { Direct materials} &£ 25,000\\ \text {Direct Labour } &22,000\\ \text { Advertising expense. } &15,000\\ \text { Rent on factory building. } &13,500\\ \text { Depreciation on factory equipment. } &6,500\\ \text {Indirect materials. } &10,000\\ \text { Sales salaries. } &28,000\\ \text {Insurance on factory equipment. } &12,000\\\end{array}$

A) £1.60.
B) £2.10.
C) £1.00.
D) £1.05.