Reamer 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:
Direct Materials......... $1,000
Direct labor........... 3,000
Sales Commissions......... 4,000
Salary of Production
Supervisor....................2,000
Indirect Materials.............400
Advertising Expense..........800
Rent of Factory Equipment 1,000
Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be: