Reference no: EM132771255

Morton Company's budgeted variable manufacturing overhead is $4.50 per direct labor-hour and its budgeted fixed manufacturing overhead is $270,000 per year.

• The company manufactures a single product whose standard direct labor-hours per unit is 2 hours. The standard direct labor wage rate is $15 per hour. The standards also allow 4 feet of raw material per unit at a standard cost of $8.75 per foot.
• Although normal activity is 30,000 direct labor-hours each year, the company expects to operate at a 40,000-hour level of activity this year.

Required:

Problem 1. Assume that the company chooses 30,000 direct labor-hours as the denominator level of activity. Compute the predetermined overhead rate, breaking it down into variable and fixed cost elements.

Problem 2. Assume that the company chooses 40,000 direct labor-hours as the denominator level of activity. Compute the predetermined overhead rate, breaking it down into variable and fixed cost elements.

Problem 3. Complete two standard cost cards for 30,000 & 40,000 DLHs