Question
A company manufactures plastic products for the home and restaurant market. The company also does contract work for other customers and uses a job-order costing
A company manufactures plastic products for the home and restaurant market. The company also does contract work for other customers and uses a job-order costing system. The flexible budget covering next years expected range of output is
Direct labor hours | 50,000 | 80,000 | 110,000 | |||
| | | ||||
Machine hours | 40,000 | 64,000 | 88,000 | |||
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Variable OH costs | $100,000 | $160,000 | $220,000 | |||
Fixed OH costs | 150,000 | 150,000 | 150,000 | |||
| | | ||||
Total OH costs | $250,000 | $310,000 | $370,000 | |||
| | |
A predetermined overhead rate based on direct labor hours is used to apply total overhead. Management has estimated that 100,000 direct labor hours will be used next year. The predetermined overhead rate per direct labor hour to be used to apply total overhead to the individual jobs next year is
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A.$3.36
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B.$3.50
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C.$3.70
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D.$3.88
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