Elite Brands Company uses standard costs for their manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data:
Production volume $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$6,000 units
Estimated variable overhead costs$\quad$ $13,500
Estimated direct labor hours $\quad$$\quad$$\quad$600 hours
At the end of the year, actual data were as follows:
Production volume $\quad$$\quad$$\quad$ $\quad$$\quad$4,000 units
Actual variable overhead costs $\quad$$\quad$$15,000
Actual direct labor hours $\quad$$\quad$$\quad$$\quad$480 hours
How much is the standard cost per direct labor hour for variable overhead?

Question

Elite Brands Company uses standard costs for their manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: 
Production volume $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$6,000 units
Estimated variable overhead costs$\quad$ $13,500
Estimated direct labor hours $\quad$$\quad$$\quad$600 hours
At the end of the year, actual data were as follows:
Production volume $\quad$$\quad$$\quad$ $\quad$$\quad$4,000 units
Actual variable overhead costs $\quad$$\quad$$15,000
Actual direct labor hours $\quad$$\quad$$\quad$$\quad$480 hours
How much is the standard cost per direct labor hour for variable overhead?

Quizplus · Accepted Answer

The standard cost per direct labor hour for variable overhead is calculated by dividing the estimated variable overhead costs by the estimated direct labor hours: $13,500 / 600 hours = $22.50 per direct labor hour.

Elite Brands Company Uses Standard Costs for Their Manufacturing Division \quad

Elite Brands Company Uses Standard Costs for Their Manufacturing Division $\quad$