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Carlson Inc. uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items: Overhead Item Cost Function Indirect materials $2.40
Carlson Inc. uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items:
Overhead Item | Cost Function |
Indirect materials | $2.40 per DLH |
Indirect labor | $3.00 per DLH |
Utilities | $1.20 per DLH |
Insurance | $72,000 |
Depreciation | $288,000 |
Information for the month of December is as follows:
Actual overhead costs incurred: | |
Indirect materials | $187,200 |
Indirect labor | 216,000 |
Utilities | 86,400 |
Insurance | 79,200 |
Depreciation | 288,000 |
Total | $856,800 |
Actual direct labor hours worked | 72,000 |
Standard direct labor hours allowed for production achieved | 81,000 |
Carlson uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 75,000 hours. Calculate the variable overhead rate.
a.$11.40 per DLH
b.$4.80 per DLH
c.$6.60 per DLH
d.$5.40 per DLH
e.None of these choices are correct.
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