Refer to C9.1 and C9.2. The manager of Speckner Company likes the old way of allocating overhead based on the number of direct labor hours used. Additional information is available:
Direct labor hours expected during the year ...................................... 4,000
Direct labor hours used during the month:
For table production .......................................................................... 200
For chair production .......................................................................... 100
For footstool production ................................................................... 60
Required
A. Determine the manufacturing overhead rate based on direct labor hours.
B. Determine the applied overhead cost for each product.
C. Explain why direct labor hours are, or are not, an inappropriate overhead allocation basis for this company.