Direct materials (3.0 pounds @ $6.00 per pound) Direct labor (1.6 hours @ $11.00 per hour) Overhead (1.6 hours @ $18.50 per hour) Standard cost per unit $ 18.00 17.60 29.60 $ 65.20 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor Power $ 15,000 75,000 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery 24,000 72,000 Taxes and insurance 17,000 Supervisory salaries Total fixed overhead costs Total overhead costs 196,000 309,000 $ 444,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,500 pounds @ $6.10 per pound) Direct labor (19,000 hours @ $11.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 41,750 176,850 17,250 34,500 24,000 97,200 15,300 196,000 $ 283,650 210,900 602,850 $ 1,097,400 Actual Cost Standard Cost