Sparkle Company Uses Job Costing and Applies Overhead Using an }&\text

$\begin{array}{lccc}&\text { Direct }&\text {Direct}&\text { Direct }\\&\text { Materials }&\text {Labour Cost }&\text {Labour Hours }\\\text { Job 400 } & \$ 200 & \$ 800 & 40 \\\text { Job 401 } & 250 & 200 & 10 \\\text { Job 402 } & 500 & 600 & 30\end{array}$ Sparkle Company uses job costing and applies overhead using an actual costing system using direct labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labour cost is $500,000 and estimated direct labour hours are 25,000. This period's actual overhead cost was $420,000, actual direct labour cost was $390,000, and actual direct labour hours were 20,000.
What is the overhead allocation rate?

A) $21/hour
B) $10/hour
C) $16/hour
D) $18/hour

Correct Answer:

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