Davidson Inc. uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items:

Overhead Item.	Cost Function
Indirect materials	$2.40 per DLH
indirect labor	$3.00 per DLH
Utilities	$1.20 per DLH
Insurance	$62500
Depreciation	$288,000

Actual overhead costs incurred:

indirect materials	$187,200
Indirect labor	$216,000
utilities	$86,400
insurance	$79,200
Depreciation	$288,000
Total	$856,800

Actual direct labor hours worked	$72,000
Standard direct labor hours allowed for production achieved	$81,000

Davidson uses expected captivity to calculate standard overhead rates. The monthly expected capacity is 16000 hours.

What is the fixed overhead rate per hour?

Answer rating: 100% (QA)

To calculate the fixed overhead rate per hour we need to determine the total fixed overhead c... View the full answer