Variable manufacturing overhead is caused by batch-level and unit-level activities. The predetermined variable overhead rate at the batch level is $1,000 per batch; at the unit level, it is $50 per direct labor hour (based on total labor hours). Fixed factory overhead is $40,000 per month. Contador had been applying fixed factory overhead based on the budgeted production volume, and Lockden instructed you to do the same. IMA EDUCATIONAL CASE JOURNAL VOL. 14, NO. 1, ART. 3, MARCH 2021 2 2021 IMA 1 All monetary values are in U.S. dollars. The budgeted fixed selling and administrative expenses for the year are $600,000; this amount is to be uniformly divided across 12 months. Variable selling expenses for 2020 are expected to be 3% of the revenue. Lockitt, Inc. uses the first-in-first-out (FIFO) cost-flow assumption.

Fixed Overhead
Per month	$ 40,000
Selling and Admin
Fixed, per month
Variable, percentage of revenue