Cosi Company Uses a Job Order Costing System and Allocates

Multiple Choice

Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is Cosi Company's overhead application rate?

A) 1600%.
B) 62.5%.
C) 67%.
D) 6.25%.
E) 160%.