Question

Lasser Company plans to produce 22,000 units next period at a denominator activity of 44,000 direct labor-hours. The direct labor wage rate is $12.00 per hour. The company's standards allow 2 yards of direct materials for each unit of product; the material costs $8.50 per yard. The company's budget includes variable manufacturing overhead cost of $2.00 per direct labor-hour and fixed manufacturing overhead of $215,600 per period.

Required:

1. Using 44,000 direct labor-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements.

Using 44,000 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.)

	Predetermined overhead rate per DLH Variable element per DLH Fixed element per DLH

2. Complete the standard cost card below for one unit of product.

(1)		(2)		(1) x (2)
Inputs	Standard Quantity or Hours		Standard Price or Rate		Standard Cost
Direct materials	2	yards	$8.50	per yard	$17.00
Direct labor		hours		per hour
Variable manufacturing overhead		hours		per hour
Fixed manufacturing overhead		hours		per hour
Total standard cost per unit

Answer 1

Standard hours per unit	2	=44000/22000
1
Predetermined overhead rate	6.90	per DLH
Variable element	2.00	per DLH
Fixed element	4.90	per DLH	=215600/44000
2
	Standard Quantity or Hours		Standard Price or Rate		Standard Cost
Direct materials	2	yards	8.50	per yard	17.00
Direct labor	2	hours	12.00	per hour	24.00
Variable manufacturing overhead	2	hours	2.00	per hour	4.00
Fixed manufacturing overhead	2	hours	4.90	per hour	9.80
Total standard cost per unit					54.80