Chojnowski Incorporated makes a single product-a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted (Planned) Overhead: Budgeted variable manufacturing overhead$82,450 Budgeted fixed manufacturing overhead 325,975 Total budgeted manufacturing overhead$ 408,425 Budgeted production (a) 25,000unitsStandard hours per unit (b) 1.70labor-hoursBudgeted hours (a) × (b) 42,500labor-hours Applying Overhead: Actual production (a) 20,000unitsStandard hours per unit (b) 1.70labor-hoursStandard hours allowed for the actual production (a) ×
(b) 34,000labor-hours Actual Overhead and Hours: Actual variable manufacturing overhead$74,812 Actual fixed manufacturing overhead 312,975 Total actual manufacturing overhead$ 387,787 Actual hours 31,700labor-hoursThe variable component of the predetermined overhead rate is closest to:
A. $2.20 per labor-hour
B. $1.76 per labor-hour
C. $1.94 per labor-hour
D. $2.36 per labor-hour
Answer: C
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