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Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:
Direct materials: 5 kg at $10.00 per kg | $ | 50.00 |
Direct labour: 2 hours at $15 per hour | 30.00 | |
Variable overhead: 2 hours at $5 per hour | 10.00 | |
Total standard cost per unit | $ | 90.00 |
The company planned to produce and sell 32,000 units in March. However, during March the company actually produced and sold 37,600 units and incurred the following costs:
- Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production.
- Direct labour: 75,000 hours at a rate of $16 per hour.
- Total variable manufacturing overhead for the month was $558,750.
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