BatCo makes metal baseball bats. Each bat requires 1 kg of aluminum at $18 per kg and 0.25 direct labor hours at $20 per hour. Overhead is assigned at the rate of $40 per direct labor hour. What amounts would appear on a standard cost card for BatCo?
$33 would appear on the standard cost card of the company.
A cost card is an approach used in the traditional costing system, in which costs such as direct material, labor, and overheads required to produce a single unit of a product are recorded.
|Particulars||Units required||Cost per unit ($)||Total ($)|
Sedona Company set the following standard costs for one unit of its product for 2017.
Direct material (20 Ibs. @ $2.50 per Ib.) $ 50
Direct labor (10 hrs. @ $22.00 per hr.) 220
Factory variable overhead (10 hrs. @ $4.00 per hr.) 40
Factory fixed overhead (10 hrs. @ $1.60 per hr.) 16
Standard cost $326
The $5.60 ($4.00 + $1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget information is also available.
Operating Levels (% of capacity)
Budgeted output (units)
Budgeted labor (standard hours)
Budgeted overhead (dollars)
During the current month, the company operated at 70% of capacity, employees worked 340,000 hours, and the following actual overhead costs were incurred.
Variable overhead costs $1,375,000
Fixed overhead costs 628,600
Total overhead costs $2,003,600
1. Show how the company computed its predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead.
2. Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable.
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