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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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