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12y ago

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What are the Methods used to calculate overhead absorption rate?

Overhead absorption rate is calculated with following methods: 1 - Machine hours method 2 - Direct labor cost method 3 - Direct labor hours method


How do you compute predetermined overhead rate as a percentage of direct labor costs and direct labor hours?

Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.


Define direct labor utilization?

Utilization is the quotient of Direct Labor Hours / Total Labor Hours. Example - John works an 8 hour day. He logged 6 hours as direct labor on Tuesday and left when his 8 hours were up. His Utilization is 6/8 or 75%.


How do you calculate labor hours?

i can not calculate please help us


How do you calculate direct labor cost?

direct labor cost is total wages and salaries of workers divided by production at normal capacity.


What is the formula calculate the direct labor?

Direct labor cost is the salaries and wages of all workers directly involved in manufacturing of goods.


How do you calculate direct labor for manafacturing?

Direct labor for manufacturing = direct labor for one unit * total number of units manufactured


What is the difference between Direct Labor hours and machine hours?

Direct labor hours is the hours available of labor or people for example if a factory has 10 workers and in a week of 5 days of 8 hours then total direct labor hours available in week is (10*8*5) 400 hours while machine hours is how much a machine can work per day of 8 hours for example if machine need setup time of 2 hours per day then hours available per day is 6 and total hours per week will be 30.


What is the formula to calculate conversion costs?

it is direct labor plus overhead costs


How do you determine the overhead rate when applying overhead costs?

Using direct labor hours: Overhead rate = Total Overhead Expenses /Direct labor hours Using Machine hours: Overhead rate = Total Overhead Expenses /Machine hours


True or false direct labor-hours or direct labor cost should not be used as a measure of activity in an activity-based costing system?

False


Will the direct labor price variance always be unfavorable if more hours are worked than the standard hours allowed for the actual output attained?

No, Direct labor price variance is created due to difference in standard labor rate and actual labor rate for example standard labor rate per unit is 10 and actual labor rate is 11 then 1 per unit is unfavourable direct labor price variance.