Sami Stitches Ltd produces two types of sewing machines, a standard model and a deluxe model.

The budgeted factory overhead costs for the production operation during 2020 are as follows.

Production of 18 000 standard sewing machines and 12 000 deluxe sewing machines is budgeted for 2020. Each standard machine requires 2.4 machine hours, and each deluxe machine requires only 2 machine hours because of the use of component parts. The company expects to sell all machines produced.
Required

(a) Prepare a factory overhead budget for 2020 based on the estimated production level.

(b) Calculate the predetermined overhead rate based on machine hours.

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Variable costs: Indirect materials Indirect labour Electricity Other Fixed costs: Production manager's salary Depreciation Insurance Miscellaneous $8.00 per machine hour 0.60 per machine hour 0.20 per machine hour 0.20 per machine hour $100000 45000 30 000 13160