Jameson Company uses a predetermine overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year: direct materials - $5,000; direct labor - $19,000; rent on factory building - $16,000; sales salaries - $24,000; depreciation on factory equipment - $7,000; indirect labor - $11,000; production supervisor's salary - $14,000. Jameson estimates that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be:A) $2.00. B) $2.79. C) $3.00. D) $4.00.

Predetermined overhead rate = $2/hour

Explanation:

Giving the following information:

Direct materials = $5,000

Direct labor = $19,000

Rent on factory building = $16,000

Sales salaries = $24,000

Depreciation on factory equipment = $7,000

Indirect labor = $11,000

Production supervisor's salary = $14,000.

Jameson estimates that 24,000 direct labor hours will be worked during the year.

The predetermined overhead rate per hour=?

Predetermined overhead rate = Estimated total manufacturing costs / estimated total amount of allocation base

Predetermined overhead rate = (Rent on factory building + Depreciation on factory equipment + Indirect labor + Production supervisor's salary) / 24000

Predetermined overhead rate = (16000 + 7000 + 11000 + 14000) / 24000 = $2/hour