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OH Rate: $4.7 per DLH Table 4 gives you the information for the last two months on the overhead cost. Use this information to determine
OH Rate: $4.7 per DLH
- Table 4 gives you the information for the last two months on the overhead cost. Use this information to determine the fixed and variable portions of the cost. (You will need this information to complete Table 5). Machine hours have been determined as the best cost driver for separating mixed cost into their fixed and variable portions. It takes approximately 10 minutes of total machine time for each cereal box (or 1/6 a machine hour per box of cereal).
Table 4 Actual Overhead cost for the last two months
|
| Month 1 | Month 2 |
| Indirect Material | $755 | $755 |
| Indirect Labor | 5,000 | 5,000 |
| Machine Maintenance | 338 | 410 |
| Electricity | 504 | 630 |
| Depreciation | 530 | 530 |
| Quality testing | 428 | 500 |
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|
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| Machine Hours * | 1,200 | 1,500 |
*10 minutes of machine time per box of cereal (1/6 hour = 1 unit)
Complete any calculations here:
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