Canoe Company Uses a Job Order Cost Accounting System and Allocates

Multiple Choice

Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was:

A) 5.0%.
B) 12.0%.
C) 20.0%.
D) 500.0%.
E) 16.7%.