The Following Data Are Available for Johnson Machine Builders $\begin{array}{lr}\text { Estimated direct labour hours } & 200000 \\\text { Applied overhead } & \$ 750000\end{array}$

question 48

Essay

The following data are available for Johnson machine builders:
$\begin{array}{lr}\text { Estimated direct labour hours } & 200000 \\\text { Applied overhead } & \$ 750000\end{array}$

The applied overhead rate is $5 per direct labour hour.
Required:
A. What was the actual direct labour hours for the year?
B. How would your answer to Part A change, if the applied overhead rate was 40 per cent less than given in the question?

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Definitions:

Contribution Margin Ratio

The percentage of sales revenue remaining after variable costs are deducted, indicating the portion contributing towards fixed costs and profit.

Contribution Format

An income statement format that separates fixed and variable costs to highlight the contribution margin.

Income Statement

A summary of a company's financial performance over a certain period, detailing revenue, expenses, and profits or losses, revealing the company's ability to generate profit.

Cost-Volume-Profit Analyses

A financial analysis tool that helps determine how changes in cost and volume affect a company's operating profit.