Question - ABC Company uses a pre-determined overhead rate based on direct labor hours to apply overhead to jobs. At the beginning of 2018, the company estimated the following costs would be incurred:
direct materials ................... $ 62,500
direct labor ....................... 96,000 (8,000 hours expected)
advertising expense ................ 15,000
utilities .......................... 30,000
rent on factory building ........... 18,000
depreciation on factory equipment .. 9,000
indirect materials ................. 14,000
sales commissions .................. 33,000
production supervisor's salary ..... 28,500
45% of the utilities relate to the administrative office buildings while 55% of the utilities relate to the factory.
Calculate ABC Company's pre-determined overhead rate based on direct labor hours. List your answer with two places after the decimal point.