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Suppose that you show a small boy two bars of fresh fudge that are equal on all dimensions (exactly the same size,shape,and weight) .You ask him if the two bars are the same,and he says "Yes." You then cut one of the bars into 10 chunks as he watches.You are surprised when he now asks if he can have the cut up fudge because it has more candy than the intact bar.This episode illustrates that the youngster:
Direct Labor-Hours
The total hours worked by employees who are directly involved in the production of goods.
Predetermined Overhead Rate
A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs and activities.
Variable Manufacturing Overhead
The portion of manufacturing overhead costs that vary with the level of production, such as utilities and materials.
Direct Labor-Hours
The cumulative hours employees spend directly participating in the manufacturing process.
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