The Spartan Restaurant Group supplies its franchise restaurants with many pre/manufactured ingredients (such as bags of frozen French fries), while other ingredients (such as lettuce and tomatoes) are sourced locally. Assume that the manufacturing plant processing the fries anticipated incurring a total of $4,212,000 of manufacturing overhead during the year. Of this amount, $1,170,000 is fixed. Manufacturing overhead is allocated based on machine hours. The plant anticipates running the machines 234,000 hours next year.
Requirements
1. Compute the standard variable overhead rate.
2. Compute the standard fixed manufacturing overhead rate.