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Mexican Spices Company makes two types of salsa, hot and mild. Information for the two flavors appears below: Hot Mild Sales $400,000 $600,000 Direct materials
Mexican Spices Company makes two types of salsa, hot and mild. Information for the two flavors appears below:
|
| Hot | Mild |
| Sales | $400,000 | $600,000 |
| Direct materials | $100,000 | $200,000 |
| Direct labor | $50,000 | $150,000 |
| Labor hours | 5,000 | 10,000 |
Mexican Spices incurred $240,000 in overhead costs for the period. Assume that Mexican Spices allocates overhead cost to products based on the labor hours worked on each product. What is the overhead application rate?
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