The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,400 direct labor-hours will be required in February. The variable overhead rate is $8.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $108,780 per month, which includes depreciation of $18,080. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be:. a. $193.690.
b. $211,850.
c. $112,940.
d. $80,750.

See below

Explanation:

The computation of overhead rate for February is seen below

First, we need to determine the fixed manufacturing overhead per labor hour

Fixed manufacturing overhead per direct labor hour = Total manufacturing overhead ÷ Total direct labor hours

= $108,780 ÷ 7,400

= $14.7

Predetermined overhead rate = Variable overhead rate + Fixed manufacturing overhead rate

= $8.50 + $14.70

= $23.2 per direct labor hour

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