Question
Delta Manufacturing Company uses a standard cost system in accounting for the cost of its main product. The following standards have been established for the
Delta Manufacturing Company uses a standard cost system in accounting for the cost of its main product. The following standards have been established for the direct manufacturing costs per unit:
Direct materials (2 kg at $7.50 per kilogram)
$15.00per unitDirect labour (3 hours at $12 per hour)
$36.00per unit
Budgeted overhead for the month of April (based on expected activity of 9,000 direct labour hours) is as follows:
Variable overhead
$29,250
Fixed overhead
19,500
Total overhead
$48,750
Overhead is applied based on labour hours. The average activity per month is 9,750 direct labour hours. The company calculates overhead rates based on average activity. Results for the month of April are as follows:
Units produced
3,150
Direct materials used (6,500 kg)$44,850Direct labour (9,500 hours)
116,375
Variable overhead
28,500
Fixed overhead
20,000
Total costs
$209,725
There was no beginning or ending work in process inventory.
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