Reef Shoe Company Has Expected Overhead Costs of $864,000

Reef Shoe Company has expected overhead costs of $864,000. The majority of the overhead costs are incurred providing production support to the direct labor force. Direct labor rates vary from $12 to $21 per hour, and more complex tasks are assigned to more skilled workers who have higher pay rates. Management projects direct labor costs to be $540,000 with 39,273 direct labor hours. More complex tasks require proportionally more support than do the less complex tasks.
Each model/size of shoe is produced in a separate production batch and constitutes a job. During the year, the company produced 6,600 pairs of the size 8 Beachcomber flip flop. A total of 4,200 direct labor hours, costing $54,600, were assigned to the job. Which method of assigning overhead should management prefer?

A) Direct labor cost is the preferred allocation base because workers paid a higher rate work on more complex jobs, and more complex jobs lead to more overhead cost.
B) Direct labor hours is the preferred allocation base because workers paid a higher rate work on more complex jobs, and more complex jobs lead to more overhead cost.
C) Direct labor cost is the preferred allocation base because it is not possible to track hours during which workers spend on each type of shoe produced.
D) Direct labor hours is the preferred allocation base because the number of hours incurred for each model of shoes is the same for each worker, regardless of the rate of pay each worker earns.