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QUESTION no 3: Ontario, Inc. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours.
QUESTION no 3:Ontario, Inc. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours. Anticipated overhead and direct-labor time for the upcoming accounting period are $800,000 and 25,000 hours, respectively. Information about the company's products follows.Standard:Estimated production volume, 3,000 unitsDirect-material cost, $25 per unitDirect labor per unit, 3 hours at $12 per hourEnhanced:Estimated production volume, 4,000 unitsDirect-material cost, $40 per unitDirect labor per unit, 4 hours at $12 per hourOntario's overhead of $800,000 can be identified with three major activities: order processing ($150,000), machine processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively. Data relevant to these activities follow.