Calculation. Building a bicycle is labor intensive. And as such, we think the best way to allocate overhead is on Direct Labor Hours. At the beginning of the year, we estimate the following annual items:

Warehouse Rent $8,000

Storefront Rent $7,000

Manufacturing Supervisor Salary $40,000

Storefront Supervisor Salary $50,000

Indirect Materials $10,000

Total Machine Hours 29,000 Hours

Total Labor Hours 10,000 Hour

Calculate the Budgeted Overhead Rate for the year