Question
Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours.
Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $4.80 per standard direct labor-hour and fixed manufacturing overhead should be $2,112,000 per year. |
The company?s product requires 4 pounds of material that has a standard cost of $10.00 per pound and 1.5 hours of direct labor time that has a standard rate of $13.40 per hour. |
The company planned to operate at a denominator activity level of 240,000 direct labor-hours and to produce 160,000 units of product during the most recent year. Actual activity and costs for the year were as follows: |
Number of units produced | 192,000 |
Actual direct labor-hours worked | 312,000 |
Actual variable manufacturing overhead cost incurred | $ 873,600 |
Actual fixed manufacturing overhead cost incurred | $ 2,184,000 |
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