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damaskus [11]
4 years ago
5

A manufacturing company has variable overhead costs of $2.50 per unit and fixed costs of $5,000 per month. Each unit requires 4

hours of direct labor and the company expects to produce 2,000 units each month. The standard overhead rate will be
Business
1 answer:
Verdich [7]4 years ago
8 0

Answer:

Standard Overhead rate is $1.25 per Direct labor hours

Explanation:

Total variable cost (2000 unit * $2.50) =    $5,000

Total fixed cost                                       =    <u>$5,000</u>

Estimated Overhead cost                     =     <u>$10,000</u>

<u />

Estimated Direct labor hour = 2000 unit * 4 hours = 8,000 hours

Standard Overhead rate = Estimated overhead cost / Estimated Direct labor hour

Standard Overhead rate = $10,000 / 8,000 hours

Standard Overhead rate = $1.25 per Direct labor hours

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