Jacson Corp

Jacson Corp.was undecided whether to use labor hours or labor cost in establishing the annual overhead rate.Labor costs are prone to fluctuate based on new hires,raises,retirements,and personnel leaving.They decided to compute both rates.The overhead costs for the year were estimated at $525,000 with expected direct labor hours of 35,000 and indirect hours of 15,000.Direct and indirect labor costs are estimated to be $420,000 and $210,000 respectively.The overhead application rate using either base (labor hours,labor cost) would be:

A) $15 per hour;125% of labor cost.
B) $10.50 per hour;83.3% of labor cost.
C) $12 per hour;80% of labor cost.
D) $12.60 per hour;120% of labor cost.