In the Year 2014, Arden Panel Works Planned the Following

Multiple Choice

In the year 2014, Arden Panel Works planned the following.
Factory overhead costs $180 000
Direct labour costs (15 000 hours at $8.00 per hour) $120 000
Machine Hours 48 000
Direct material costs $108 000
The predetermined overhead rate is based on direct labour hours and planned production during 2014 of 12 000 units. The direct material cost in each unit would be:

A) $7.20.
B) $3.50.
C) $15.00.
D) $9.00.