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Direct materials (4.0 pounds $6.00 per pound) Direct labor (1.9 hours @ $11.00 per hour). Overhead (1.9 hours $18.50 per hour) Standard cost per
Direct materials (4.0 pounds $6.00 per pound) Direct labor (1.9 hours @ $11.00 per hour). Overhead (1.9 hours $18.50 per hour) Standard cost per unit $ 24.00 20.90 35.15 $ 80.05 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs. Depreciation-Building Depreciation-Machinery 24,000 72,000 Taxes and insurance Supervisory salaries Total fixed overhead costs 16,000 280,250 392,250 Total overhead costs $ 527,250 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 pounds @ $6.10 per pound) Direct labor (22,000 hours @ $11.30 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 41,800 176,200 17,250 34,500 24,000 97,200 14,400 280,250 $ 375,150 248,600 685,600 $ 1,309,350
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