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ACCT 386 - Week 6 - Homework - Question 5

ACCT 386 - Week 6 - Homework - Question 5
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ACCT 386 - Week 6 - Homework - Question 5

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Question 5

Dresser Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company’s budget for the current year:

 

 

 

  Denominator activity (direct labor-hours)

 

13,000  

  Variable manufacturing overhead cost at 13,000 direct labor-hours

$

49,400  

  Fixed manufacturing overhead cost

$

143,000  


The standard cost card for the company’s only product is given below:

 

 

 

  Direct materials, 2 pounds at $3.20 per pound

$

6.40   

  Direct labor, 2 direct labor-hours at $12.00 per direct labor-hour

 

24.00   

  Overhead, 123.33% of direct labor cost

 

29.60   

 



  Standard cost per unit

$

60.00   

 






During the year, the company produced 5,300 units of product and incurred the following costs:

 

 

 

  Materials purchased, 30,000 pounds at $2.70 per pound

$

81,000  

  Materials used in production (in pounds)

 

26,000  

  Direct labor cost incurred, 12,000 direct labor-hours at $8.6 per direct labor-hour

$

103,200  

  Variable manufacturing overhead cost incurred

$

35,600  

  Fixed manufacturing overhead cost incurred

$

33,400