National Inc

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. 
Annual Sales Model in Units 
High F Great P 
10,000 
16,000 
National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: 
High F Great P Direct materials $38.00 $25.40 Direct labor $17.52 $13.14 
Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total 
2,409 engineering hours $ 404,712 12,848 inspection hours 269,808 33,726 machine hours 539,616 26,400 direct labor hours 134,904 
$1,349,040 
National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities: 
Great High F P 
Engineering and design hours Quality control inspection hours Machine hours Labor hours 
969 1,440 5,648 7,200 20,286 13,440 12,000 14,400 
What is the overhead application rate using the firm's volume-based costing system? (Rounded to the nearest percent or cents.) 
Multiple Choice O 5,110 percent of direct labor cost. O 5,189 percent of direct labor cost. 
O $51.89 per direct labor-hour. O 68 percent of direct labor cost. O 350 percent of direct labor cost.