Direct materlals (4.0 lbs. @ $4.00 per lb.) 16.00 Direct labor (1.9 hrs. $13.00 per hr.) Overhead (1.9 hrs. @ $18.50 per hr) 24.70 35.15 $75.85 Total standard cost The predetermined overhead rate $18.50 per direct labor hour is based on an expected volume 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) Varlable overhead costs Indirect materials Indirect labor Power Repairs and maintenance $15,000 75,000 15,000 30,000 Total variable overhead costs $135,000 Flxed overhead costs Depreclation-building Depreclation-machinery Taxes and Insurance 24,000 71,000 16,000 281,250 Supervision Total fixed overhead costs 392,250 Total overhead costs $527,250