Axsom Inc Bases Its Manufacturing Overhead Budget on Budgeted Direct Labor-Hours

Multiple Choice

Axsom Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 1,300 direct labor-hours will be required in March. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $20,020 per month, which includes depreciation of $2,600. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for March should be:

A) $22.30
B) $24.30
C) $15.40
D) $8.90