O'Brien Hats Inc. manufactures three different styles of hats: Vogue, Beauty, and Deluxe. O'Brien expects to incur $576,000 of overhead cost during the next fiscal year. Other budget information follows:

Required
a. Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.
b. Use machine hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.
c. Describe a set of circumstances where it would be more appropriate to use direct labor hours as the allocation base.
d. Describe a set of circumstances where it would be more appropriate to use machine hours as the allocationbase.

Transcribed Image Text:

Vogue Beut Dluxe Total Direct labor hours 2400 Machine hours 1200 4200 1,400 5,400 1,400 12,000 4,000