Question
Consider a manufacturer that makes a certain product. Variable manufacturing overhead and fixed manufacturing overhead are allocated to each unit made based on budgeted
Consider a manufacturer that makes a certain product. Variable manufacturing overhead and fixed manufacturing overhead are allocated to each unit made based on budgeted direct labour-hours. The following are the production data. (There were no beginning or ending inventories.) Budgeted variable overhead rate per DLH Budgeted DLBs per unit Data for May are as follows: Budgeted production volume Actual direct labour-hours: Actual variable overhead costs 12 1,250 units 5,100 DLHS $ 58,650 Actual production volume Budgeted fixed overhead costs Actual fixed overhead costs 1,600 units $ 45,000 $51,300 Required: 1-a. Calculate the direct labour-hours management will have expected to incur in light of the production volume achieved. Direct labour-hours hours 1-b. Which amount is relevant for determining labour efficiency variance? Relevant for determining labour efficiency variance
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