Question:
Calculating factory overhead
The normal capacity of a manufacturing plant is 5,000 units per month. Fixed overhead at this volume is $2,500, and variable overhead is $7,500. Additional data follow:
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Month 1
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Month 2
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Actual production (units)
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5,200
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4,500
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Actual factory overhead
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$10,100
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$9,200
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a. Calculate the amount of factory overhead allowed for the actual levels of production.
b. Compute the overhead application rate per unit at the various levels of production. (Round to the nearest whole cent.)