Crinkle Cut Clothes Company Manufactures Two Products CC1 and CC2

Multiple Choice

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. 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 $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.

Compute the plantwide overhead rate for next year.

A) $28.00 per DLH.
B) $37.80 per DLH.
C) $1.35 per DLH.
D) $5.00 per DLH.
E) $.20 per DLH.