Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs.Cosi expects to incur $800,000 of overhead during the next period,and expects to use 50,000 labor hours at a cost of $10.00 per hour.What is Cosi Company's overhead application rate?
A)6.25%.
B)62.5%.
C)160%.
D)1600%.
E)67%.

Question

Quizplus · Accepted Answer

The overhead application rate can be calculated by dividing the expected total overhead by the expected total direct labor cost: $800,000 / ($10.00 x 50,000) = 160%. Therefore, the correct answer is (C) 160%.

Cosi Company Uses a Job Order Costing System and Allocates