Question
Chesley Company is planning to produce 2,800,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each
Chesley Company is planning to produce 2,800,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.4 standard hour of labor for completion. The total budgeted overhead was $1,981,100. The total fixed overhead budgeted for the coming year is $1,325,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are:
Actual production (units)2,570,000
Actual variable overhead$643,700
Actual direct labor hours (AH)1,537,000
Actual fixed overhead$1,390,000
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