Use the following information for the next 2 questions. O'Hare Sisters Manufacturing uses job costing and applies overhead using a normal costing system using direct labor hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labor cost is $500,000 and estimated direct labor hours are 25,000. This period actual overhead cost was $420,000, actual direct labor cost was $390,000, and actual direct labor hours were 20,000.
-What is the overhead allocation rate?
A) $21/hour
B) $10/hour
C) $16/hour
D) $18/hour

Question

Use the following information for the next 2 questions.  O'Hare Sisters Manufacturing uses job costing and applies overhead using a normal costing system using direct labor hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labor cost is $500,000 and estimated direct labor hours are 25,000. This period actual overhead cost was $420,000, actual direct labor cost was $390,000, and actual direct labor hours were 20,000.
-What is the overhead allocation rate?
A) $21/hour 
B) $10/hour 
C) $16/hour 
D) $18/hour

Quizplus · Accepted Answer

The overhead allocation rate is calculated based on the total overhead costs divided by the total number of hours worked. In this case, the correct rate is $16/hour.

Use the Following Information for the Next 2 Questions