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Cornerstone Exercise 8.5 n Company cleans and applies powder coat Johis, Johnston has budgeted the following amounts for various overhead categories in the paint to
Cornerstone Exercise 8.5 n Company cleans and applies powder coat Johis, Johnston has budgeted the following amounts for various overhead categories in the paint to metal items on a job-order OBJECTIVE 2 CORNERSTONE coming year. Supplies Gas Indirect labor Supervision Depreciation on equipment Depreciation on the building Rental of special equipment Electricity (for lighting, heating, and air conditioning) Telephone $216,000 50,000 176,000 73,500 47,000 40,000 11,000 28,900 4,300 1,200 50,000 . Landscaping service Other overhead In the coming year, Johnston expects to powder coat 120,000 units. Each unit takes 1.3 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovens-all units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed. (Round all overhead rates to the nearest cent.) Required: 1. Calculate the number of direct labor hours Johnston must budget for the coming year. Cal- culate the variable overhead rate. Calculate the total fixed overhead for the coming year. (continued
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