(35 points) Ceja Company uses a job-order costing system and a predetermined overhead rate based on machine hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $7,500,000 and machine hours used would be 50,000.

The following information pertains to March of the current year:

Job X Job Y Job Z Totals

Beginning balance $350,000 $450,000 $550,000 $1,350,000

Current period costs added:

Direct materials requisitioned (used) $250,000 $300,000 $200,000 $750,000

Direct labor costs $280,000 $270,000 $220,000 $770,000

Current period activity

Machine hours 1,400 2,400 2,200 6,000

Assume that Jobs X and Y are completed during the month and that Job X was sold on account for $1,500,000.

Required:

a. Compute the predetermined overhead application rate for the year.