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Ethical Corp. estimates that its production for the coming year will be 10,000 units, which is 80% of normal capacity, with the following unit costs: materials, P40; direct labor, P60. Direct labor is paid at the rate of P24 per hour. The  most expensive piece of machinery, must be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P400,000 for variable overhead and P400,000 for fixed overhead. Required:  Compute the overhead rate for each of the following bases, using the normal capacity activity level: Physical output Materials cost Direct labor cost Direct labor hours Machine hours

Ethical Corp. estimates that its production for the coming year will be 10,000 units, which is 80% of normal capacity, with the following unit costs: materials, P40; direct labor, P60. Direct labor is paid at the rate of P24 per hour. The  most expensive piece of machinery, must be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P400,000 for variable overhead and P400,000 for fixed overhead. Required:  Compute the overhead rate for each of the following bases, using the normal capacity activity level: Physical output Materials cost Direct labor cost Direct labor hours Machine hours

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 6PB: Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen...
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Ethical Corp. estimates that its production for the coming year will be 10,000 units, which is 80% of normal capacity, with the following unit costs: materials, P40; direct labor, P60. Direct labor is paid at the rate of P24 per hour. The  most expensive piece of machinery, must be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P400,000 for variable overhead and P400,000 for fixed overhead.

Required:  Compute the overhead rate for each of the following bases, using the normal capacity activity level:

  1. Physical output
  2. Materials cost
  3. Direct labor cost
  4. Direct labor hours
  5. Machine hours
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