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Flexible Budgets and Standard Costs ? ? James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company
Flexible Budgets and Standard Costs
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James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget: Operating Levels 80% Overhead Budget Production in units Standard direct labor hours Budgeted overhead 8,000 32,000 Variable overhead costs 22,400 Indirect materials Indirect labor Power Maintenance 32,000 6,400 3,200 Total variable costs 64,000 Fixed overhead costs Rent of factory building Depreciation-machinery Supervisory salaries 16,000 11,300 30,300 Total fixed costs 57,600 121,600 Total overhead costsStep by Step Solution
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