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Why is the 100,000 hours used as the “budget based on actual hours” in this question? Why wouldn’t it be 94,000 x $5?
Water Control, Inc. manufactures water pumps and uses a standard cost system. The standard factory overhead costs per water pump are based on direct labor hours and are shown below:
Variable overhead (4 hours at $8/hour) $ 32
Fixed overhead (4 hours at $5*/hour) 20
Total overhead cost per unit $ 52
*Based on a capacity of 100,000 direct labor hours per month.
The following additional information is available for the month of November.
22,000 pumps were produced although 25,000 had been scheduled for production.
94,000 direct labor hours were worked at a total cost of $940,000.
The standard direct labor rate is $9 per hour.
The standard direct labor time per unit is four hours.
Variable overhead costs were $740,000.
Fixed overhead costs were $540,000.
The fixed overhead spending variance for November was:
FAR - 70, 81
AUD - 83
BEC - 77
REG - 70, 78Licensed in Ohio.
Now what the hell do I do?
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