Simplex Company has the following estimated costs for next year:Direct Materials$15,000Direct Labor$55,000Sales Commissions$75,000Salary of Production Manager$35,000Indirect Materials$5,000Advertising Expense$11,000Rent on Factory Equipment$16,000Simplex estimates that 10,000 direct labor and 16,000 machine-hours will be worked during the year. If overhead is applied on the basis of machine-hours, the overhead rate per hour will be:

$3.5 per machine hour.

Explanation:

Per the above, we will need to calculate first Estimated manufacturing overhead , which is given as;

Estimated manufacturing overhead = Salary of production supervisor + Indirect materials + Rent on factory equipment

= $35,000 + $5,000 + $16,000

= $56,000

Predetermined overhead rate

= Estimated manufacturing overhead / Estimated machine hours

= $56,000 / 16,000 hours

= $3.50 per machine hour

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