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Crawford Company's standard fixed overhead cost is $6.00 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.

Required:
What is the activity level on which Crawford based its fixed overhead rate?

Respuesta :

Answer:

The answer is "[tex]\$ \ 100,000 \ hours[/tex]"

Explanation:

Budgeted fixed cost  [tex]= \$ 600,000[/tex]  

labour hours [tex]= \frac{ \$ 6 }{hour}[/tex]  

[tex]\text{overhead rate} = \frac{ \text{Budgeted fixed cost}}{labour\ hours}[/tex]

                     [tex]= \frac{\$ \ 600, 000}{\$ \ 6}\\\\= \$ \ 100,000 \ hours[/tex]

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