Question 8:

Hi please double check this one.

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 V Standard costs per carton of garbage bags: Labour hours 2 Wage rate $8 per hour Total overhead $20 Rolls of plastic 0.004 rolls Calculate the following: (a) Applied overhead per direct labour hour. Applied overhead per direct labour hour 7.81