Vaden 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 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$61,740 Budgeted fixed manufacturing overhead 390,040 Total budgeted manufacturing overhead$ 451,780 Budgeted production (a) 35,000unitsStandard hours per unit (b) 1.40labor-hoursBudgeted hours (a) × (b) 49,000labor-hours Applying Overhead: Actual production (a) 38,000unitsStandard hours per unit (b) 1.40labor-hoursStandard hours allowed for the actual production (a) ×
(b) 53,200labor-hours Actual Overhead and Hours: Actual variable manufacturing overhead$94,680 Actual fixed manufacturing overhead 405,040 Total actual manufacturing overhead$ 499,720 Actual hours 52,600labor-hoursThe variable component of the predetermined overhead rate is closest to:
A. $1.26 per labor-hour
B. $1.78 per labor-hour
C. $1.93 per labor-hour
D. $1.80 per labor-hour
Answer: A
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