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:
$$\begin{array} { | l | r | l | } \hline \text { Level of activity' } & 2,500 & \mathrm { DLHs } \\\hline \text { Overhead costs at the denominator } & & \\\text { activity lev' el: } & & \\\hline \text { Variable overhead cost } & \$ 8,500 & \\\hline \text { Fred overhead cost } & \$ 34,625 & \\\hline\end{array}$$ The following data pertain to operations for the most recent period:
$$\begin{array} { | l | r | r | } \hline \begin{array} { l } \text { Actual hours } \\\text { Standard hours allowed for the actual } \\\text { output }\end{array} & 2,600 & \mathrm { DLHs } \\\hline \begin{array} { l } \text { Actual total variable manufacturing } \\\text { overhead cost }\end{array} & 2,692 & \mathrm { DLHs } \\\hline \begin{array} { l } \text { Actual total fixed manufacturing overhead } \\\text { cost }\end{array} & \$ 9,100 & \\\hline\end{array}$$ What is the predetermined overhead rate to the nearest cent?

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