Operating at a normal level of 30,000 direct labour-hours, Lasser Company produces 10,000 units of product each period. The direct labour wage rate is £6 per hour. Two-and-a-half metres of direct materials go into each unit of product; the material costs £8.60 per metre. The flexible budget used to plan and control manufacturing overhead costs is given below (in condensed form): Direct labour hours Cost formula Overhead costs (per direct labour-hour) 000'o7 000'ov 000'08 Variable costs 000'88 3 £ 57,000 £ 76,000 Fixed costs 168,000 000' 000'891 Total overhead cost £ 225,000 000'907 3 000't 3 Required 1- Using 30,000 direct labour-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements. 2- Complete the standard cost card below for one unit of product: Direct materials, 2.5 metres at £ 8.60 £ 21.50 Direct labour, ? Variable overhead, ? Fixed overhead, ? Total standard cost per unit 23 Variable overhead per unit /30000= Fixed overhead per unit = 00000 Hours per unit Direct materials Direct labour Variable overheads Fixed overheads
Operating at a normal level of 30,000 direct labour-hours, Lasser Company produces 10,000 units of product each period. The direct labour wage rate is £6 per hour. Two-and-a-half metres of direct materials go into each unit of product; the material costs £8.60 per metre. The flexible budget used to plan and control manufacturing overhead costs is given below (in condensed form): Direct labour hours Cost formula Overhead costs (per direct labour-hour) 000'o7 000'ov 000'08 Variable costs 000'88 3 £ 57,000 £ 76,000 Fixed costs 168,000 000' 000'891 Total overhead cost £ 225,000 000'907 3 000't 3 Required 1- Using 30,000 direct labour-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements. 2- Complete the standard cost card below for one unit of product: Direct materials, 2.5 metres at £ 8.60 £ 21.50 Direct labour, ? Variable overhead, ? Fixed overhead, ? Total standard cost per unit 23 Variable overhead per unit /30000= Fixed overhead per unit = 00000 Hours per unit Direct materials Direct labour Variable overheads Fixed overheads
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 2PB: Five Card Draw manufactures and sells 10,000 units of Aces, which retails for $200, and 8,000 units...
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