Avril Inc. 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:

Multiple Choice

• $20.30 per direct labor-hour

• $16.90 per direct labor-hour

• $21.50 per direct labor-hour

• $4.60 per direct labor-hour