Case 12-66 (Part Level Submission)

You have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to buy a new type of biodegradable plastic at a fixed price of $100 per roll. The plastic is then cut and sealed to make garbage bags. Fixed factory overhead is estimated to be $125,000 per month. During this past month, 8,000 cartons of garbage bags were produced, which represents 80% of the activity volume. You are given the following information:

Rolls of plastic used			40
Variable overhead incurred			$61,000
Overhead efficiency variance			$5,000	U
Standard costs per carton of garbage bags:
	Labour hours		2
	Wage rate		$8	per hour
	Total overhead		$20
	Rolls of plastic		0.004	rolls

(

Applied overhead per direct labour hour.

Applied overhead per direct labour hour

$ 10

Attempts: 1 of 1 used

Standard direct labour hours allowed for units produced.

Standard direct labour hours allowed for units produced

16000

Attempts: 1 of 1 used

Calculate the following:

Activity volume.

Activity volume			cartons
			direct labour hours