Chapter 7, Problem 11P

Overhead application rate

Creole Manufacturing Inc. uses a job order cost system and standard costs. It manufactures one product, whose standard cost follows:

The standards are based on normal capacity of 2,400 direct labor hours. Actual activity for October follows:

Required:

1. 1. Compute the variable and fixed factory overhead rates per unit.
2. 2. Compute the variable and fixed overhead rates per direct labor hour.
3. 3. Determine the total fixed factory overhead based on normal capacity.