Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours
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Question:
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
Direct materials: 5 pounds at $9 per pound | $ | 45 |
Direct labor: 3 hours at $14 per hour | 42 | |
Variable overhead: 3 hours at $8 per hour | 24 | |
Total standard cost per unit | $ | 111 |
The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs:
- Purchased 180,000 pounds of raw materials at a cost of $8.50 per pound. All of this material was used in production.
Direct laborers worked 69,000 hours at a rate of $15 per hour.
Total variable manufacturing overhead for the month was $565,110.
Required:
What direct labor cost would be included in the company’s planning budget for March?
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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