Dano Inc Bases Its Manufacturing Overhead Budget on Budgeted Direct Labor-Hours

Dano Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $110,200 per month, which includes depreciation of $28,880. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 7,600 direct labor-hours will be required in December.
-The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for December should be:

A) $14.50
B) $12.20
C) $16.00
D) $1.50

Correct Answer:

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