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Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours.
The predetermined overhead rate is closest to:
a. $1.80 per direct labor-hour
b. $5.50 per direct labor-hour
c. $9.20 per direct labor-hour
d. $3.70 per direct labor-hour
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