Question: Jaxon Ltd currently allocates overhead costs based on direct labour hours (DLH). Jaxon Ltd budgeted the following costs and activities for the current year 2020:

Jaxon Ltd currently allocates overhead costs based on direct labour hours (DLH). Jaxon Ltd budgeted the following costs and activities for the current year 2020: total overhead $1,050,000; total labour cost $1,680,000; total machine hours 60,000 MH; and total direct labour hours 210,000 DLH.

What would be the OH rate if Jaxon Ltd used machine hours to allocate OH costs?

a.$17.50/MH

b.$8/MH

c.$28/MH

d.$5/MH

e.Unable to be determined from the information given

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