Exhibit 10-2 Benny's Bakery Produces Bagels for Resale at Local Grocery Stores.The

question 19

Multiple Choice

Exhibit 10-2
Benny's Bakery produces bagels for resale at local grocery stores.The master budget indicates that the company expects to use 2.5 pounds of direct materials for each unit produced at a cost of $10.00 per pound (one unit = one batch of bagels) .Each unit produced will require 0.30 direct labor hours at a cost of $24.00 per hour.Variable manufacturing overhead is applied based on direct labor hours at a rate of $4.80 per hour.Last year's sales were expected to total 40,000 units.Benny just received last year's actual results showing sales of 35,000 units.
-Refer to Exhibit 10-2.What is the standard cost per unit for variable manufacturing overhead?

• A)$16.00
• B)$4.80
• C)$1.44
• D)$10.00
• E)None of the answer choices is correct.

---

Definitions:

Scrap Costs

The costs associated with the disposal or recycling of materials that are not part of finished products.

Product-Level Activity

This refers to costs and activities associated with specific products, separate from the overall operation of a company.

Batch-Level Activity

Activities and costs associated with processing a group of units or products together as a single batch.

Unit-Level Activity

Activities that vary directly with the volume of production units, such as processing, assembly, or packaging activities in manufacturing.