Direct materials (4.0 lbs. $400 per ib) Direct labor (1.9 hrs. @ $13.00 per hr.) Overhead (1.9 hrs. $18.50 per twr.) 16.00 24.70 35.15 Total standard cost $75.85 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory's copecity of 20,000 units per month. Folowing are the company's budgeted overhead costs per month a' the 75% capacity level. Overhead Budget (75% capacity) Vanable overhead costs Indirect materials Indirect iabor Power Repairs and maimenance $15.000 75,000 15,000 30,000 Totol varioble overhead costs $135,000 Fixed overhead costs 24,000 71000 16,000 281,250 Taxes and insurance Total fixed overheed costs 392 250 Totel overhead costs $527,250 The company incurred the following actual costs when it operated at 75% of capacity in October Direct matenais (61,000 lbs. 54.20 per Ib.) Drect labor (28,000 hrs. $13.30 per hr.) Cverhead costs S 258 200 372,400 Indirect maternals Indirect labor Power Repoirs and maintenance $ 41,950 176.350 17 250 34.500 24.000 95,850 14 400 281250685,550 Taxes and Insuronce Total cos1s S 1,314,150