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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 10,000 units (80% of
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12.500 units) and prepared the following overhead budget: Operating Levels 80% Overhead Budget Production in units 10,000 30,000 Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials s 21,000 30,000 6,000 3,000 Indirect labor Power Maintenance Total variable costs 60,000 Fixed overhead costs Rent of factory building Depreciation-machinery Supervisory salaries 14,000 11,100 28,900 Total fixed costs 54,000 114,000 Total overhead costs During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs Overhead Costs Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation-machinery Supervisory salaries $ 21,000 33,300 6,750 4,025 14,000 11,100 32,600 Total actual overhead costs $122,775
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