Problem:
The chief cost accountant for Sassy Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning June 1 would be $97,500, and total direct labor costs would be $75,000. During June, the actual direct labor cost totaled $6,300, and factory overhead cost incurred totaled $8,250.
Required:
Question: What is the predetermined factory overhead rate based on direct labor cost?
Note: Provide support for rationale.