Direct material (15 Ibs. @ $3.80 per Ib.)		$	57.00
Direct labor (10 hrs. @ $9.40 per hr.)			94.00
Factory variable overhead (10 hrs. @ $4.20 per hr.)			42.00
Factory fixed overhead (10 hrs. @ $2.50 per hr.)			25.00
Standard cost		$	218.00

The $6.70 ($4.20 + $2.50) total overhead rate per direct labor hour is based on an expected operating level equal to 60% of the factory's capacity of 64,000 units per month. The following monthly flexible budget information is also available.

		Operating Levels (% of capacity)
Flexible Budget			55%				60%				65%
Budgeted output (units)			35,200				38,400				41,600
Budgeted labor (standard hours)			352,000				384,000				416,000
Budgeted overhead (dollars)
Variable overhead		$	1,478,400			$	1,612,800			$	1,747,200
Fixed overhead			960,000				960,000				960,000
Total overhead		$	2,438,400			$	2,572,800			$	2,707,200

During the current month, the company operated at 55% of capacity, employees worked 334,000 hours, and the following actual overhead costs were incurred.

Variable overhead costs

$

1,421,000

Fixed overhead costs

1,024,000

Total overhead costs

$

2,445,000

			--------At 55% of Operating Capacity--------
	Predetermined OH Rate	Standard DL Hours	Overhead Costs Applied	Actual Results	Variance	Fav./Unf.
Variable overhead costs	$4.20	352,000	$1,478,400
Fixed overhead costs	2.50	352,000
Total overhead costs	$6.70