Question

Budgeted fixed manufacturing cost was $890,000 for 40,000 units or 100,000 hours, Actual fixed overhead totaled $910,000. The standard fixed production overhead cost per direct-labor hour was: _________$

Answer 1

Estimated fixed overhead= $8.9 per direct labor hour

Step-by-step explanation:

Estimated overhead cost= $890,000

Standard hours allowed= 100,000 hours

To calculate the fixed estimated overhead per standard hour, we need to use the following formula:

Predetermined fixed manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined fixed manufacturing overhead rate= 890,000 / 100,000

Predetermined fixed manufacturing overhead rate= $8.9 per direct labor hour