Creole Manufacturing Inc. uses a job order cost system and standard costs. It manufactures one product, whose standard cost follows:
Materials, 20 yards @ $0.90 per yard..................... $18
Direct labor, 4 hours @ $9.00 per hour................... 36
Total factory overhead per unit (the ratio of variable costs
to fixed costs is 3 to 1)........................................... 32
Total unit cost................................................ $86
The standards are based on normal capacity of 2,400 direct labor hours. Actual activity for October follows:
Materials purchased, 18,000 yards @ $0.92 per yard
Materials used, 9,500 yards............................................. $16,560
Direct labor, 2,100 hours @ $9.15 per hour.................... 19,215
Total factory overhead, 500 units actually produced....... 17,760
Required:
1. Compute the variable and fixed factory overhead rates per unit.
2. Compute the variable and fixed overhead rates per direct labor hour.
3. Determine the total fixed factory overhead based on normal capacity.