Compute standard manufacturing overhead rates (Learning Objective 3)

Fresh-Cut processes bags of organic frozen vegetables sold at specialty grocery stores. Fresh-Cut allocates manufacturing overhead based on direct labor 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 labor standard for each case is one-quarter of an hour.

1. Compute the standard variable overhead rate.

2. Compute the fixed overhead rate.

3. Compute the standard total overhead rate.