Operating at a normal level of 54,000 direct labor-hours, Lasser Company produce
ID: 2486606 • Letter: O
Question
Operating at a normal level of 54,000 direct labor-hours, Lasser Company produces 18,000 units of product each year. The direct labor wage rate is $12.00 per hour. Two and one-half yards of direct materials go into each unit of product; the material costs $9.0 per yard. Variable manufacturing overhead should be $1.90 per standard direct labor-hour. Fixed manufacturing overhead should be $313,200 per period. Required: 1. Using 54,000 direct labor-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements. (Round your answers to 2 decimal places.) 2. Complete the standard cost card below for one unit of product: (Round your intermediate calculations and final answers to 2 decimal places.)Explanation / Answer
1) Fixed manufacturing overhead rate = 313200/54000 = 5.8
Variable manufacturing overhead rate = 1.9
Total manufacturing overhead rate = 5.8+1.9=7.7 per direct labour hour
2) Standard cost per unit = 2.5*9+3*12+7.7*3 = 81.6 per unit
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