Milan Manufacturing Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

The accounting records show the Mossman Job consumed the following resources:

If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Milan?
A) $1.05 per direct labor-hour
B) $0.59 per direct labor-hour
C) $0.95 per direct labor-hour
D) $1.71 per direct labor-hour

Question

Milan Manufacturing Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

The accounting records show the Mossman Job consumed the following resources:

If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Milan?
A) $1.05 per direct labor-hour 
B) $0.59 per direct labor-hour 
C) $0.95 per direct labor-hour 
D) $1.71 per direct labor-hour

Quizplus · Accepted Answer

Cost driver rate = $874,000 ÷ 920,000 = 0.95 per dlh

Milan Manufacturing Company Has Identified Three Cost Pools to Allocate