Question

Crawford Company's standard fixed overhead cost is $6.00 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.
Required:
What is the activity level on which Crawford based its fixed overhead rate?

Answer 1

Answer:

The answer is "$\ \ 100,000 \ hours$"

Explanation:

Budgeted fixed cost  $= \ 600,000$  

labour hours $= \frac{ \ 6 }{hour}$  

$\text{overhead rate} = \frac{ \text{Budgeted fixed cost}}{labour\ hours}$

                     $= \frac{\ \ 600, 000}{\ \ 6}\\\\= \ \ 100,000 \ hours$