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Peace Company uses a job order cost system. Actual manufacturing overhead was $88,000 and actual direct labor cost was $110,000 for the period. The company
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Peace Company uses a job order cost system. Actual manufacturing overhead was $88,000 and actual direct labor cost was $110,000 for the period. The company estimated that its annual manufacturing overhead cost would be $75,000 and the company estimated it would incur $100,000 of direct labor cost for the year. If Peace Company applies manufacturing overhead based on direct labor cost, the company's overhead application (allocation) rate should be:
A. 107%.
B. 80%.
C. 88%.
D. 75%.
68.182% (rounded).
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