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: direct $25,000 direct labor 22,000 advertising 15,000. rent on factory building 13,500 depreciation on factory ,500 indirect materials 10, sales ,000 insurance on factory 12,000 paulson estimated that 40,000 direct labor hours and 20,000 machine hours would be worked during the year. the predetermined overhead rate per machine hour will be:

predetermined overhead rate per machine hour $2.10

Explanation:

The overhead rate will be calculate as the sum of the expected cost divide by a cost driver in this case; machine hours

Overhead expected cost:

rent on factory building                     13,500

depreciation on factory equipment   6,500

indirect materials                               10,000

insuance on factory equipment       12,000  

Total overhead                                 42,000

machine hours 20,000

42,000 / 20,000 = 2.10

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total