Avril Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October.The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be:
A. $21.50 per direct labor-hour
B. $4.60 per direct labor-hour
C. $20.30 per direct labor-hour
D. $16.90 per direct labor-hour
Answer: A
Business
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