Alpine Manufacturing's normal capacity is 25,000 direct labor hours. If Alpine's variable costs are $32,500 and its fixed costs are $17,500 when the company runs at normal capacity, what is its standard manufacturing overhead rate per unit? A. $1.30 B. $2.00 C. $0.70 D. $1.85

Alpine Manufacturing's normal capacity is 25,000 direct labor hours. If Alpine's variable costs are $32,500 and its fixed costs are $17,500 when the company runs at normal capacity, what is its standard manufacturing overhead rate per unit? A. $1.30 B. $2.00 C. $0.70 D. $1.85

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 8EA: Suppose that a company has fixed costs of $18 per unit and variable costs $9 per unit when 15,000...

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What is it's standard manufacturing overhead rate per unit for this general accounting question?

Alpine Manufacturing's normal capacity is 25,000
direct labor hours. If Alpine's variable costs are
$32,500 and its fixed costs are $17,500 when the
company runs at normal capacity, what is its
standard manufacturing overhead rate per unit?
A. $1.30
B. $2.00
C. $0.70
D. $1.85

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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