1. The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,300 direct labor-hours will be required in August. The variable overhead rate is $8.70 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $117,180 per month, which includes depreciation of $24,940. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:

$27.30

$23.80

$18.60

$8.70