Micro Enterprises planned to produce 120,000 lerts per year. Annual overheads, of which 32.5% are variable, are estimated at $320,400. Each lert takes 1.2 machine hours and 3 labor hours to produce. The firm allocates overhead by direct labor hours. In February, when 11,000 lerts were produced, 32,000 direct labor hours were recorded and expenditures on overheads amounted to $29,650. Which is true for this month?

Question

Quizplus · Accepted Answer

The Answer of Micro Enterprises planned to produce 120,000 lerts per year. Annual overheads, of which 32.5% are variable, are estimated at $320,400. Each lert takes 1.2 machine hours and 3 labor hours to produce. The firm allocates overhead by direct labor hours. In February, when 11,000 lerts were produced, 32,000 direct labor hours were recorded and expenditures on overheads amounted to $29,650. Which is true for this month?

Micro Enterprises Planned to Produce 120,000 Lerts Per Year