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Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Departments predetermined overhead rate is based on machine-hours and the Customizing Departments predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Casting		Customizing
Machine-hours		20,000		13,000
Direct labor-hours		1,000		7,000
Total fixed manufacturing overhead cost	$	152,000	$	68,600
Variable manufacturing overhead per machine-hour	$	2.10
Variable manufacturing overhead per direct labor-hour			$	4.30

The predetermined overhead rate for the Casting Department is closest to:

Multiple Choice

• $9.70 per machine-hour

• $7.60 per machine-hour

• $2.10 per machine-hour

• $27.71 per machine-hour