Question

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?

Answer 1

The answer is "
`\$ \ 100,000 \ hours`"

Step-by-step explanation:

Budgeted fixed cost
`= \$ 600,000`

labour hours
`= ( \$ 6 )/(hour)`

`\text{overhead rate} = \frac{ \text{Budgeted fixed cost}}{labour\ hours}`

`= (\$ \ 600, 000)/(\$ \ 6)\\\\= \$ \ 100,000 \ hours`