Vinnie Morelli Corporation has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.

Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity

Ordering and Receiving Orders $120,000 500 orders

Machine Setup Setups 297,000 450 setups

Machining Machine hours 1,500,000 125,000 MH


Parts 1,200,000 1,000,000 parts

Inspection Inspections 300,000 500 inspections

If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is

A) $1.20 per direct labor hour.

B) $240 per order.

C) $0.12 Per part.

D) $6,834 per order.

If overhead is applied using traditional costing based on based on direct labor hours, the overhead application rate is

A) $9.60

B) $12.00

C) $15.00

D) $34.17