Horton Industries Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to products. The company has provided the following estimated costs for next year:

Direct materials	$	10,000
Direct labor	$	30,000
Sales commissions	$	40,000
Salary of production supervisor	$	20,000
Indirect materials	$	4,000
Advertising expense	$	8,000
Rent on factory equipment	$	10,000

Horton estimates that 5,000 direct labor-hours and 10,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:

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Multiple Choice

• $6.80.

• $6.40.

• $8.20.

• $3.40.