Overhead Budget
Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year.
| Supplies |
$223,000 |
| Gas |
55,000 |
| Indirect labor |
174,000 |
| Supervision |
73,000 |
| Depreciation on equipment |
51,000 |
| Depreciation on the buliding |
43,000 |
| Rental of special equipment |
12,500 |
| Electricity (for lighting, heating, and air conditioning) |
27,100 |
| Telephone |
4,600 |
| Landscaping service |
1,300 |
| Other overhead |
59,000 |
In the coming year, Johnston expects to powder coat 200,000 units. Each unit takes 1.3 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovens-all units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed.
Required:
1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. When required, round your answers to the nearest cent and use the rounded answers in subsequent requirements.