Arca Incorporated makes a single product-a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted (Planned) Overhead: Budgeted variable manufacturing overhead$38,700 Budgeted fixed manufacturing overhead 170,700 Total budgeted manufacturing overhead$209,400 Budgeted production (a) 20,000units Standard hours per unit (b) 1.50machine-hours Budgeted hours (a) × (b) 30,000machine-hours Applying Overhead: Actual production (a) 15,000units Standard hours per unit (b) 1.50machine-hours Standard hours allowed for the
actual production (a) × (b) 22,500machine-hours Actual Overhead and Hours: Actual variable manufacturing overhead$9,812 Actual fixed manufacturing overhead 185,700 Total actual manufacturing overhead$195,512 Actual hours 22,300machine-hours ?The predetermined overhead rate is closest to:
A. $8.69 per machine-hour
B. $13.03 per machine-hour
C. $10.47 per machine-hour
D. $6.98 per machine-hour
Answer: D
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