Kudzu Company Sells Two Products Big X and Little X

True/False

Kudzu Company sells two products Big X and Little X. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $525,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 16,000 units of Big X and 18,000 units of Little X next year.
$\begin{array}{|c|c|c|}\hline & \text { Direct } & \text { Direct } \\& \text { Material } & \text { Labor Dollars } \\&\text { Per Unit } & \text { Per Unit } \\\hline \text { Big X } & \$ 5 & \$ 20 \\\hline \text { Little X } & \$ 3 & \$ 10 \\\hline\end{array}$
-Kudzu's plantwide overhead rate will be $21 per direct labor hour next year.
Plantwide overhead rate = $525,000/25,000 DLH = $21 per DLH