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Pierce Company uses a standard cost system in which it applies manufacturing overhead to its product on the basis of standard direct labor-hours (DLHs). Below is the standard cost card for the product:
Direct materials, 4.5 feet at $3.80 per foot
$17.10
Direct labor, 3.0 DLHs at $9.50 per DLH
28.50
Variable overhead, 3.0 DLHs at $2.00 per DLH
6.00
Fixed overhead, 3.0 DLHs at $8.00 per DLH
24.00
$75.60
Last year, the company produced 6,000 units of product using 17,000 direct labor hours. The actual total fixed overhead cost for the year was $140,000 and the volume variance was $12,000, favorable.
Required:
a. Compute the total fixed overhead cost that was originally budgeted.
b. Compute the denominator activity figure that the company used in computing predetermined overhead rates.
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