The Following Standard Costs Were Developed for One of Commodore

question 58

Essay

The following standard costs were developed for one of Commodore Company's products: $\begin{array}{c}\text {STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 3 \text { pounds } \times £ 2 \text { per pound } & £ 6.00 \\\text { Direct labour: } & 2 \text { hours } \times £ 12 \text { per hour } & 24.00 \\\text { Variable overhead: } & £ 4 \text { per hour } & ? \\\text { Fixed overhead } & &\underline{ ?} \\\text { Total standard cost per unit } & & ?\end{array}\end{array}$ The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 12,000 \\\text { Materials purchased } & 50,000 \text { pounds at } £ 2 \text { per pound } \\\text { Materials used } & 40,000 \text { pounds } \\\text { Direct labour } & 25,000 \text { hours at } £ 13 \text { per hour }\\\text { Overhead incurred: }\\\text { Variable } & £ 90,000 \\\text { Fixed } & £ 300,000\end{array}$ Budgeted fixed overhead for the period is £280,000, and expected capacity for the period is 28,000 direct labour hours.
a.Calculate the standard fixed overhead rate.
b.Complete the standard cost card for the product.