James Corp. applies overhead on the basis of direct labor hours.
For the month of May, the company planned production of 10,000
units (80% of its production capacity of 12,500 units) and prepared
the following overhead budget:
Operating Levels
Overhead Budget
80%
Production in units
10,000
Standard direct labor hours
36,000
Budgeted overhead
Variable overhead costs
Indirect materials
$
21,600
Indirect labor
36,000
Power
7,200
Maintenance
3,600
Total variable costs
68,400
Fixed overhead costs
Rent of factory building
20,000
Depreciation—Machinery...