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Milberg Co. uses absorption costing and standard costing to improve cost control. In 2016, the total budgeted overhead rate was $1.55 per direct labour hour.

Milberg Co. uses absorption costing and standard costing to improve cost control. In 2016, the total budgeted overhead rate was $1.55 per direct labour hour. When preparing the budget, Milberg expected a monthly activity level of 10,000 direct labour hours. The monthly variable overhead cost budgeted for this level of activity was $9,500.

The following data on actual results are provided for the month of November 2016.

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Materials purchased 20,000 units Direct labour costs incurred $36,000 Total of direct labour rate and efficiency variances $ 500 F Actual wage rate ($0.20 less than standard) $ 4.80 Underapplied variable overhead costs $ 1,065 U Total underapplied fixed and variable overhead costs $ 2,256 U Materials price variance $ 200 F Materials efficiency variance S 610 F Price of purchased materials $ 0.60 per unit Materials used 15,000 units

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