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3 January, 14:36

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is factory depreciation. If the budgeted direct labor time for December is 8,000 hours, then average budgeted manufacturing overhead per direct labor-hour is closest to: Multiple Choice $14.38 per direct labor-hour $12.50 per direct labor-hour $9.38 per direct labor-hour $16.25 per direct labor-hour

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  1. 3 January, 14:48
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    Correct answer is A.

    $14.38 per direct labor-hour

    Explanation:

    If the budgeted direct labor time for December is 8,000 hours, then total budgeted factory overhead per direct labor hour is (rounded):

    Total budgeted factory overhead for December = Variable Factory Overhead rate per direct labor hour * budgeted direct labor time for December + Fixed Factory Overhead per month

    Total budgeted factory overhead for December = 5*8000 + 75000

    Total budgeted factory overhead for December = $ 115,000

    Total budgeted factory overhead per direct labor hour = Total budgeted factory overhead for December/budgeted direct labor time for December

    Total budgeted factory overhead per direct labor hour = 115000/8000

    Total budgeted factory overhead per direct labor hour = 14.38
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