Question 5

Sable Company is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the most recent year:

Estimated direct labor cost	$500,000
Actual direct labor cost	$450,000
Estimated manufacturing overhead costs	$400,000
Actual manufacturing overhead costs	$350,000
Estimated direct labor hours	250,000
Actual direct labor hours	245,000

If Sable Company uses direct labor hours as the allocation base, what would the allocated manufacturing overhead be for the year?

		$392,000
		$400,000
		$343,000
		$350,000