ABC Company uses a pre-determined overhead rate based on direct labor hours to apply overhead...

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Accounting

ABC Company uses a pre-determined overhead rate based on direct labor hours to apply overhead to jobs. At the beginning of 2006, the company estimated the following costs would be incurred:

 direct materials ................... $ 62,500 direct labor ....................... 90,000 (total of 6,000 hours expected) advertising expense ................ 15,000 utilities .......................... 20,000 rent on factory building ........... 15,000 depreciation on factory equipment .. 6,500 indirect materials ................. 10,000 sales commissions .................. 28,500 production supervisor's salary ..... 33,000 60% of the utilities relate to the factory while 40% of the utilities relate to the administrative office buildings. Calculate ABC Company's pre-determined overhead rate based on direct labor hours. List your answer with two places after the decimal point (i.e., $7.63).

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