Question:
Huggins Manufacturing Company
Huggins Manufacturing Company uses a job order cost system and standard costs. It manufactures one product, whose standard cost follows:
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Materials, 10 yards@$200 per yard
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$20
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Direct labor, 4 hours@$1200 per hour
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48
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Total factory overhead per unit (the ratio of variable costs to fixed costs is 2 to 1)
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42
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Total unit cost
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$110
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The standards are based on normal capacity of 3,600 direct labor hours. Actual activity for October follows:
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Materials purchased, 20,000 yards@$195 per yard
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$39,000
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(Materials used, 19,500 yards)
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|
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Direct labor, 3,500 hours@1210 per hour
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19,215
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Total factory overhead, 900 units actually produced
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37,500
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Required:
1. Compute the variable and fixed factory overhead rates per unit.
2. Compute the variable and fixed overhead rates per direct labor hour.
3. Determine the total fixed factory overhead based on normal capacity.