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Whispering Winds and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak,
Whispering Winds and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size. One non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 950 units were produced; 4,750 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead costs were as follows. Standard (1.000 units) Actual (950 units) Indirect materials $ 12.800 $ 13,100 Indirect labor 45,700 54,300 (Fixed) Manufacturing supervisors salaries 23,900 23,400 (Fixed) Manufacturing office employees salaries 13,800 13,300 (Fixed) Engineering costs 28.700 26,600 Computer costs 10,600 10,600
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