Answer:
a. <u>Monthly Factory Overhead Cost Budget Fabrication Department</u>
Direct Labor Hours 9,000 10,000 11,000
Variable Factory Overhead $40,500 $45,000 $49,500
Cost at $4.50 per hour
Fixed Factory Overhead Costs $60,000 $60,000 $60,000
Total Factory Overheads $100,500 $105,000 $109,500
b. Normal Production = 10,000 Units
Total Factory Overheads = $105,000
Factory Overhead Cost per unit = $105,000 / 10,000 Units
Factory Overhead Cost per unit = $10.5 per unit
Factory Overhead Cost absorbed when 9,000 hours used in the department:
= 9,000 Hours * $10.5 per Unit
= $94,500
