Globe steel Furniture Ltd (GSFL) manufactures three types of steel tables Deluxe, Prince and King.The company has been experiencing steady declines in its profitability in recent times.GSFL Ltd currently uses conventional product costing system whereby overhead costs are allocated on the basis of direct labour hours.The direct labour hours are estimated to be 146,000 hours.The Direct material and Direct Labour costs per unit for the three products are as below:

DeluxePrinceKingDirect Material$360$500$600Direct Labour$90$120$150The management suspects that conventional product costing system used may have contributed to the profit declines. Therefore , the CFO implemented an alternative system namely,activity-based product costing system.Given below are each activity, its cost and its related activity driver.

ActivityCostActivity DriverMaterial handling$ 96,000Weight of raw materialMachining

$ 1,072,000Machine hours

Assembly$292,000Direct Labour hoursTotal manufacturing cost$ 1,460,000

The following information pertains to each product line of GSFL Ltd for the year:

DeluxePrinceKingUnits to be produced10,0004,00020,000Machine hours per unit6210Weight (kg)of raw material per unit130.5Labour hours per unit345

1) Calculate the predetermined overhead rate based on Direct labour hours (0.5 mark)Please only enter numberdo not use dollar sign or decimal point

Predetermined Rate =Answer