This year, Pyramid Company expects to incur \($3,000,000\) in manufacturing overhead costs and to use 40,000 direct labor hours at a cost of \($600,000\) and 80,000 machine hours.

Required

a. Prepare a predetermined overhead rate based on direct labor hours, direct labor cost, and machine hours.

b. Why might Pyramid Company prefer to use machine hours to allocate manufacturing overhead?

c. Using each of the predetermined overhead rates calculated in part a and the data below for Job 128, determine the cost of Job 128.

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Direct materials Direct labor Machine time $6,000 $4,000 (200 hours at $15 per hour + 100 hours at $10 per hour) 700 hours