Flawless Cosmetic Company Manufactures and Distributes Several Different Products -
Based on This Information, If Flawless Changes Its Allocation

Multiple Choice

Flawless Cosmetic Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $7 per direct labor hour. Loren is the department manager of the Makeup Department that produces Products - Concealer (C) and Glow Cream (GC) . Jennifer is the department manager of the Hair Care Department that manufactures Product - Shampoo (S) . The product costs (per case of 24 bottles) and other information are as follows:
$\begin{array}{lccc}&&\text { Products }\\ &\text { C } & \text { GC } & \text { S }\\ \text { Direct materials } & \$ 100.00 & \$ 72.00 & \$ 48.00 \\ \text { Direct labor } & 42.00 & 31.50& 12.00\\ \text { Overhead } & 28.00 & 21.00 & 14.00\\&\$170.00&\$124.50&\$74.00\\\text { Machine hours } & 4 & 2 & 3 \\\text { Number of cases (per year) } & 300 & 500 & 600 \end{array}$

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Based on this information, if Flawless changes its allocation basis to machine hours, what is the overhead rate per machine hour?

A) $3.00
B) $2.00
C) $21.00
D) $6.825