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The Starbright Corporation has compiled the following data.The company intends to use this information to develop standard costs per unit for its single product:
Direct materials = $50 per ton
Direct labor = $12.75 per hour
Variable manufacturing overhead = $5 per direct labor hour
Fixed manufacturing overhead = $18,700
Expected production = 1,700 units
Each unit of the company's single product requires 2.5 tons of direct materials and 22.5 hours to manufacture.
-What is the standard total manufacturing overhead cost?
A)$191,250
B)$18,700
C)$487,900
D)$209,950

Question

Quizplus · Accepted Answer

The standard total manufacturing overhead cost includes both variable and fixed components. Variable manufacturing overhead is $5 per direct labor hour, and each unit requires 22.5 hours, so for one unit, the variable overhead is $5 * 22.5 = $112.5. For 1,700 units, the total variable overhead is $112.5 * 1,700 = $191,250. The fixed manufacturing overhead is $18,700. Therefore, the total manufacturing overhead cost is $191,250 (variable) + $18,700 (fixed) = $209,950.

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