Question
LUTHER COMPANY USES A PREDETERMINED OVERHEAD RATE OF $40.00 PER DIRECT LABOR HOUR. THE RATE WAS BASED ON OVERHEAD ESTIMATED TO BE $800,000 AND 20,000
LUTHER COMPANY USES A PREDETERMINED OVERHEAD RATE OF $40.00 PER DIRECT LABOR HOUR. THE RATE WAS BASED ON OVERHEAD ESTIMATED TO BE $800,000 AND 20,000 LABOR HOURS.
THE COMPANY MAKES 3 PROUCTS, XF-1, XF-2 AND XF-3. WE PRODUCE 4,000 UNITS OF XF-1 THAT REQUIRES 5,000 LABOR HOURS AND HAS A DIRECT MATERIAL COST OF $28 PER UNIT. WE PRODUCE 15,000 UNITS OF XF-2 THAT REQUIRES 12,000 LABOR HOURS AND HAS A DIRECT MATERIAL COST OF $55 PER UNIT. WE PRODUCE 14,000 UNITS OF XF-3 THAT REQUIRES 3,000 LABOR HOURS AND HAS A DIRECT MATERIAL COST OF $12 PER UNIT. THE LABOR RATE PER HOUR IS $56 PER HOUR
MACHINIST COSTS $450,000
RETOOLING $125,000
PURCHASING $75,000
GENERAL FACTORY $150,000
XF-1 XF-2 XF-3
MACHINING COSTS
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