Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and heavy-duty. The company uses a job-order cost-accounting system with manufacturing overhead applied on the basis of direct-labor hours. The system has been in place with little change for 25 years. Product costs and annual sales data are as follows: Annual sales (units) Product costs: Standard Model 20,000 Deluxe Model 1,300 Raw material $ 16 $ 31 Direct labor 10 (0.5 hr. at $20) 20 (1 hr. at $20) Manufacturing overhead 50 100 $ 76 5151 Heavy-Duty Model 9,400 $ 45 20 (1 hr. at $20) 100 $165 Total product cost "The calculation of the predetermined overhead rate is as follows: Manufacturing-overhead budget: Depreciation, machinery Maintenance, machinery Depreciation, taxes, and insurance for factory Engineering Purchasing, receiving and shipping Inspection and repair of defects Material handling Miscellaneous manufacturing overhead costs Total $1,350,000 130,000 240,000 320,000 270,000 370,000 460,000 160,000 $3,300,000