Using the following budget data for Valley Corporation, which produces only one product, calculate the companys predetermined manufacturing overhead application rate for variable overhead. Hint: The factory supervisors salary is direct labor, since it is incurred regardless of production. SG&A expenses relate to the entire operations of Valley Corporation and not just related to manufacturing.

Units to be produced	11,000
Units to be sold	10,000
Indirect materials, varying with production	$1,000
Indirect labor, varying with production	10,000
Factory supervisors salary, incurred regardless of production	20,000
Depreciation on factory building and equipment	30,000
Utilities to operate factory machines	12,000
Security lighting for factory	2,000
Selling, general and administrative (SG&A) expenses	5,000