Schneider, Inc. allocates overhead to production using a budgeted rate based on direct labor hours. The company had the following information relating to Year 1:

Budgeted factory overhead $74,800

Allocated factory overhead $76,500

Under-allocated factory overhead $ 1,800

Budgeted direct labor hours 44,000

If Schneider decides to use the actual results (i.e., the actual overhead rate) from Year 1 to determine the Year 2 overhead rate, the Year 2 overhead rate is closest to:

a. $1.700

b. $1.738

c. $1.740

d. $1.780

e. $1.660

(PLEASE BE DETAILED)