The Awesome Systems Company, Which Uses Direct Labor Hours to Assign

question 112

Essay

The Awesome Systems Company, which uses direct labor hours to assign overhead costs to products, developed the following standard cost for one of their products:
STANDARD COST CARD PER UNIT
Materials: 10 pounds × $8 per pound $80.00
Direct labor: 3 hours × $32 per hour 96.00
Variable manufacturing overhead: $20 per direct labor hour ?
Fixed manufacturing overhead ?
Total standard cost per unit ?
The following information is available regarding the company's operations for the period:
Units produced: 15,000
Materials purchased: 180,000 pounds @ $7.20 per pound
Materials used: 160,000 pounds
Direct labor: 18,000 hours @ $37.00 per hour
Manufacturing overhead incurred:
Variable $880,000
Fixed $2,560,000
Budgeted fixed manufacturing overhead for the period is $4,800,000, and expected capacity for the period is 60,000 direct labor hours.
Required:
a. Calculate the standard fixed manufacturing overhead rate.
b. Complete the standard cost card for the product.

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Definitions:

Significance Level

A threshold in hypothesis testing that determines the probability level below which the null hypothesis is rejected, typically set at 0.05 or 5%.

Treatment

In research, treatment refers to any experimental condition applied to subjects or participants to observe its effect.

Significance

The likelihood that a result from data collected during research is not due to chance.

Differences

Refers to the discrepancy or variation between two or more entities, values, or states.