Solution-Define calculate the variable overhead rate

Define calculate the variable overhead rate

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Reference no: EM131758395

Overhead Budget

Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year.

Supplies	$223,000
Gas	55,000
Indirect labor	174,000
Supervision	73,000
Depreciation on equipment	51,000
Depreciation on the buliding	43,000
Rental of special equipment	12,500
Electricity (for lighting, heating, and air conditioning)	27,100
Telephone	4,600
Landscaping service	1,300
Other overhead	59,000

In the coming year, Johnston expects to powder coat 200,000 units. Each unit takes 1.3 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovens-all units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed.

Required:

1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. When required, round your answers to the nearest cent and use the rounded answers in subsequent requirements.

Reference no: EM131758395

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Define calculate the variable overhead rate

Reference no: EM131758395

Reference no: EM131758395

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