Xonic uses standard direct labor hours as the activity index and expects to produce 13,200 gallons during the year at normal capacity. It takes 2 direct labor hours for each gallon. Amount = Overhead Rate per Direct Labor Hours Budgeted Overhead Costs Variable Fixed Total $79,200 52,800 $132,000 Standard Direct Labor Hours 26,400 26,400 26,400 $3.00 2.00 $5.00 Standard manufacturing overhead rate per gallon is $10 ($5 x 2 hours). Xonic uses standard direct labor hours as the activity index and expects to produce 13,200 gallons during the year at normal capacity. It takes 2 direct labor hours for each gallon. Amount = Overhead Rate per Direct Labor Hours Budgeted Overhead Costs Variable Fixed Total $79,200 52,800 $132,000 Standard Direct Labor Hours 26,400 26,400 26,400 $3.00 2.00 $5.00 Standard manufacturing overhead rate per gallon is $10 ($5 x 2 hours)