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. DirectMaterialper UnitDirectLabor Dollarsper UnitCC1$37.10 $22.40 CC2$25.20 $15.40 Compute the plantwide overhead rate for next year.
A. $28.00 per DLH.
B. $37.80 per DLH.
C. $0.20 per DLH.
D. $5.00 per DLH.
E. $1.35 per DLH.
Answer: D
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