Use information below to answer the following questions.
Osborne Ltd manufactures a wide range of leather suitcases. The following costs are expected to be incurred by the company during May:
-Refer to the table above. The overhead recovery rate (rounded), using direct labour hours as the allocation base, is:

Question

Use information below to answer the following questions.
Osborne Ltd manufactures a wide range of leather suitcases. The following costs are expected to be incurred by the company during May: 
-Refer to the table above. The overhead recovery rate (rounded), using direct labour hours as the allocation base, is:

Quizplus · Accepted Answer

To calculate the overhead recovery rate using direct labour hours as the allocation base, we need to divide the total overhead cost by the total amount of direct labour hours.

Total overhead cost = $43,200 + $16,800 + $18,000 = $78,000

Total direct labour hours = 9,000 + 2,000 + 2,500 = 13,500

Overhead recovery rate = $78,000 ÷ 13,500 = $5.78 (rounded to nearest cent)

Therefore, the overhead recovery rate (rounded) using direct labour hours as the allocation base is $7.20 per DLH.

The best choice is C.

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