Use the information below to answer the following question(s).
Sable Company is debating the use of direct labour cost or direct labour hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the most recent year:

-If Sable Company uses direct labour cost as the allocation base, what would the allocated manufacturing overhead be for the year?

Question

Use the information below to answer the following question(s).
Sable Company is debating the use of direct labour cost or direct labour hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the most recent year:
 
-If Sable Company uses direct labour cost as the allocation base, what would the allocated manufacturing overhead be for the year?

Quizplus · Accepted Answer

If Sable Company uses direct labour cost as the allocation base, then the allocation rate would be $4 per direct labour cost ($360,000/90,000). Therefore, the allocated manufacturing overhead would be:
$240,000 + ($20 × $4) + ($100 × $4) = $360,000.

Use the Information Below to Answer the Following Question(s)