Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive. During the period, the company produced 4500 units of Product A requiring a total of 750 labor hours and 2000 units of Product B requiring a total of 150 labor hours. What allocation rate should be used if the company incurs overhead costs of $13,500?
A. $2.08 per unit
B. $15 per labor hour
C. $18.00 per labor hour for Product A and $90 per labor hour for Product B
D. None of these.
Answer: B
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