Digital Systems allocates manufacturing overhead based on machine hours. Each connector should require ten machine hours. According to the static budget, Digital Systems is expected to incur:

During January, Digital Systems actually used 825 machine hours to make the 75 connectors. Digital Systems’ predetermined standard total manufacturing overhead rate is

a. $5.25 per machine hour

b. $8.00 per machine hour

c. $13.25 per machine hour

d. $16.06 per machine hour

1,000 machine hours per month (100 connectors x 10 machine hours per connector) $5,250 in variable manufacturing overhead costs $8,000 in fixed manufacturing overhead costs