Hal’s Heating produces furnaces for commercial buildings. The company’s master budget shows the following standards information. Expected production for January: 300 furnaces Direct materials: 3 heating elements at \($40\) per element Direct labor: 35 hours per furnace at \($18\) per hour Variable manufacturing overhead: 35 direct labor hours per furnace at \($15\) per hour Required

a. Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead using the format shown in Exhibit 10.1.

b. Assume Hal’s Heating produced 320 furnaces during January. Prepare a flexible budget for direct materials, direct labor, and variable manufacturing overhead using the format shown in Exhibit 10.2.

Exhibit 10.1

Exhibit 10.2

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Standard Costs at Jerry's Ice Cream Direct materials (2 pounds per unit at $1 per pound)* Direct labor (0.10 hours at $13 per hour)b Variable overhead (0.10 direct labor hours at $5 per hour) Standard variable production cost per unit Standard Cost per Unit $2.00 1.30 0.50 $3.80 a. Direct materials standards come from the direct materials purchases budget presented in Chapter 9. b. Direct labor standards come from the direct labor budget presented in Chapter 9. c. Variable overhead costs are applied to products based on direct labor hours. Variable overhead cost per direct labor hour is calculated by dividing total variable overhead costs of $100,200 (from the Manufacturing Overhead Budget in Chapter 9) by 20,040 total direct labor hours (from the direct labor budget in Chapter 9), which results in a standard variable overhead rate of $5 per direct labor hour.