The following information for the past year is available from Thinnews Co., a company that uses machine hours to apply standard factory overhead cost to outputs:

Actual total factory overhead cost incurred	$	29,000
Actual fixed overhead cost incurred	$	11,000
Budgeted fixed overhead cost	$	8,000
Actual machine hours		4,000
Standard machine hours allowed for the units manufactured		4,700
Denominator volumemachine hours		4,500
Standard variable overhead rate per machine hour	$	3

The standard fixed overhead application rate, to two (2) decimal places, is:

Multiple Choice

• $0.78 per machine hour.

• $1.78 per machine hour.

• $2.78 per machine hour.

• $3.78 per machine hour.

• $4.78 per machine hour.