Vino produces hubsters. Variable is adapted on direct labor hours. Vino expects

Question

Vino produces hubsters. Variable is adapted on direct labor hours. Vino expects production for the coming period to be 2080 units At that level of activity, variable overhead is expected to be S18720. It should take 3 direct labor hours to produce 1 hubster. Actual results are as follows: Number of hubsters produced: 2600 Actual direct labor hours: 6240 Actual variable overhead cost: S14976 Complete the following standard cost sheet: What would be in a flexible budget for materials cost? What would be in a flexible budget for labor cost? What would be in a flexible budget for variable overhead cost?

Explanation / Answer

Standard labor hours allowed = 2,080 units x 3 hrs = 6,240 hours.

So, Standard variable overhead per hour = Variable overhead budgeted / Standard hours allowed = $18,720 / 6,240 = $3.00 per labor hour.

So, in the above table, Variable overhead row will be 3 hours x $3.00 = $9.00

So, Standard unit cost = $27 + $42 + $9 = $78

Flexible budget for materials = Actual units x Standard input cost per unit = 2,600 x $27 = $70,200

Flexible budget for Labor = Actual units x Standard input cost per unit = 2,600 x $42 = $109,200

Flexible budget for Variable overhead = Actual units x Standard input cost per unit = 2,600 x $9 = $23,400

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