Avril Incorporated Bases Its Manufacturing Overhead Budget on Budgeted Direct

Multiple Choice

Avril Incorporated 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) $4.60 per direct labor-hour
B) $21.50 per direct labor-hour
C) $20.30 per direct labor-hour
D) $16.90 per direct labor-hour