Cook Company estimates that 316,600 direct labor hours will be worked during the
ID: 2490732 • Letter: C
Question
Cook Company estimates that 316,600 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, are computed for the year. It is estimated that direct labor hours worked each month will range from 26,400 to 36,300 hours. During October, 26,400 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $7,310, depreciation $5,610, insurance $2,342, rent $2,500, and property taxes $1,150. Variable overhead costs: indirect labor $12,124, indirect materials, $5,155, repairs $4,941, utilities $5,412, and lubricants $2,469.Explanation / Answer
In the given question, the actual requirement is not given. However, after going through the question, it ia assumed that under recovery or over recovery of overead is to be calculated for the month of October 2014 and accordingly, answer has been given:
For the Year ending 2014 Amount Budgeted Hours Overhead Rcovery rate per hour Fixed Oerhead 227520 316600 $0.72 Variable Oerhead 345094 316600 $1.09