The Northridge plant manufactures two different ski boots: the Runner and the Racer. These are the only two products planned for production in the plant this year. The following data provide planned production for this year and the associated projected cost data.
| Models Runner | Racer | |
| Projected production (units) Unit costs | 2,500 | 6,200 |
| Direct materials | $ 16.00 | $11.75 |
| Direct labor ($18/hour) | 36.00 | 27.00 |
| Manufacturing overhead | 54.00 | 40.50 |
| Selling and administrative | 8.60 | 19.40 |
| Unit cost | $114.60 | $98.65 |
Overhead is assigned to products based on direct labor dollars. The overhead rate is established at the beginning of the year using a flexible budget. The variable manufacturing overhead rate in the flexible budget is projected to be 70 percent of direct labor dollars.
Required:
What estimate of fixed manufacturing overhead was used in setting the overhead rate at the beginning of the year?
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