Julia Electronics LLC is preparing a flexible budget for the coming year and the following maximum capacity estimates for the furniture division are available

Assume that Julia Electronics LLC 's normal capacity is 80% of maximum capacity.What would be the total factory overhead rate,based on direct labor hours,in a flexible budget at normal capacity?

Question

Julia Electronics LLC is preparing a flexible budget for the coming year and the following maximum capacity estimates for the furniture division are available

Assume that Julia Electronics LLC 's normal capacity is 80% of maximum capacity.What would be the total factory overhead rate,based on direct labor hours,in a flexible budget at normal capacity?

Quizplus · Accepted Answer

Normal capacity = 80% of maximum capacity
Direct labor hours at normal capacity = 59,840 hours (80% of 74,800 hours)
Total factory overhead at normal capacity = $448,800 (80% of $561,000)
Factory overhead rate = Total factory overhead / Direct labor hours
Factory overhead rate = $448,800 / 59,840 hours
Factory overhead rate = $7.50 per direct labor hour. 
Therefore, the best choice is C.

Julia Electronics LLC Is Preparing a Flexible Budget for the Coming