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

Actual total factory overhead cost incurred	$ 36,000
Actual fixed overhead cost incurred	$ 8,000
Budgeted fixed overhead cost	$ 10,000
Actual machine hours	8,000
Standard machine hours allowed for the units manufactured	5,500
Denominator volumemachine hours	8,500
Standard variable overhead rate per machine hour	$ 3

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

Multiple Choice

• $0.18 per machine hour.

• $1.18 per machine hour.

• $2.18 per machine hour.

• $3.18 per machine hour.

• $4.18 per machine hour.