A Manufacturer of Industrial Equipment Has a Standard Costing System

Multiple Choice

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{lrr} \text { Level of activity} &2,500 \mathrm{DLH}\\ \text {Overhead costs at the denominator activity level: } &\\ \text { Variable overhead cost } &\$8,500\\ \text { Fixed overhead cost} &\$34,625\\\end{array}$


The following data pertain to operations for the most recent period:
$\begin{array}{lrr} \text { Actual hours} &2,600\mathrm{DLHs} \\ \text {Standard hours allowed for the actual output } & 2,592 \mathrm{DLH}\\ \text { Actual total variable manufacturing overhead cost } &\$9,100\\ \text {Actual total fixed manufacturing overhead cost } &\$ 35,025\\\end{array}$

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What is the predetermined overhead rate to the nearest cent?

A) $16.97.
B) $17.25.
C) $16.59.
D) $17.65.