Austin Company Uses a Job Order Cost Accounting System. the Company's Executives Estimated That Direct Labor W?

Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate?

a. $6.00 per direct labor hour.
b. $7.50 per direct labor hour.
c. $6.67 per direct labor hour.
d. $8.33 per direct labor hour.
e. $7.08 per direct labor hour.

Suggestion:

The predetermined OH = 1.5m with applied DLH for the month at 180,000 DLH then the predetermined OH Rate = $1.5/180,000 = 8.33

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