Fresh-Cut processes bags of frozen organic vegetables sold at specialty grocery stores. Fresh-Cut allocates manufacturing overhead based on direct labour hours. Fresh-Cut has projected total overhead for the year to be $800,000. Of this amount, $600,000 relates to fixed overhead expenses. Fresh-Cut expects to process 160,000 cases of frozen organic vegetables this year. The direct labour standard for each case is 15 minutes.
Requirements
1. Compute the standard variable overhead rate.
2. Compute the fixed overhead rate.
3. Compute the standard total overhead rate.