Cartier Inc

Multiple Choice

Cartier Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $5.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $39,930 per month, which includes depreciation of $12,870. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,300 direct labor-hours will be required in April. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for April should be:

A) $14.00 per direct labor-hour
B) $5.80 per direct labor-hour
C) $17.90 per direct labor-hour
D) $12.10 per direct labor-hour