Question
Solomon Corporation estimated its overhead costs would be $23,600 per month except for January when it pays the $163,770 annual insurance premium on the manufacturing
Solomon Corporation estimated its overhead costs would be $23,600 per month except for January when it pays the $163,770 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $187,370 ($163,770 + $23,600). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,500 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,700 units of product in each month except July, August, and September, in which it produced 4,750 units each month. Direct labor costs were $23.80 per unit, and direct materials costs were $11.80 per unit.
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