Edwards Auto Body uses a job order cost system. Overhead is applied to jobs on the basis of direct labor hours
During the current period, Job No. 337 was charged $425 in direct materials, $475 in direct labor, and $190 in overhead. If direct labor costs an average of $16 per hour, the company's overhead application rate is:
A. $7.27 per direct labor hour.
B. $6.40 per direct labor hour.
C. $17.50 per direct labor hour.
D. $40 per direct labor hour.
B
475/$190 = $2.5; $16/$2.5 = $6.40
Business
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