Company manufactures pillows in a highly automated process. For

2017,

the company estimates production of

40,000

pillows. Possible cost-allocation bases are direct-labor hours and machine hours. The standard hours for each pillow are

0.20

direct-labor hours and

0.80

machine hours. The company estimates that total variable overhead costs for the year will be

$640,000.

Which cost-allocation base is most appropriate for

Heavenly Pillows

Company? What is the company's budgeted variable overhead cost rate per hour (direct-labor or machine)? What is the budgeted variable overhead cost per pillow?

Which cost-allocation base is most appropriate for

Heavenly Pillows

Company?

Machine hours

are most appropriate as a cost-allocation base because of the

highly automated

nature of the company's production.

What is the company's budgeted variable overhead cost rate per hour (direct-labor or machine)?

The company's budgeted variable overhead cost rate per hour is $

20