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At the beginning of 2003, Grub Chemical Company developed cost standards for the production of its new product, Choco. The variable cost standards below relate to each 10-gallon batch of Choco: Standard Cost Per Batch Milk chocolate (2 pounds (a S0.85 per pound) $1.70 Direct labor (1.25 direct labor hours $12.00 per hour) $15.00 Variable overhead (1.25 direct labor hours $44.00 per hour) $55.00 Variable overhead at Grub is based on direct labor hours. The actual results for 2003 were as follows Number of batches produced 3,800 Direct labor hours incurred 4,510 9,000 Pounds of milk chocolate purchased Pounds of milk chocolate used in production 7,880 $7,200 Cost of chocolate purchased $53,218 Direct labor cost Variable overhead cost $205,700