Kirsten Believes Her Company's Overhead Costs Are Driven (Affected) by the Number

Multiple Choice

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive. During the period, the company produced 5,300 units of Product A requiring a total of 830 labor hours and 2,800 units of Product B requiring a total of 230 labor hours. What allocation rate should be used if the company incurs overhead costs of $24,380?

A) $23 per labor hour
B) $3.01 per unit
C) $29.37 per labor hour for Product A and $106 per labor hour for Product B
D) None of these.