Kandy Harts manufactures custom T-shirts.Each T-shirt can be imprinted front and back with photos, company logos or other information.Each T-shirt requires 2 ounces of ink, 15 minutes of direct labor (processing, folding, packaging), and a plastic bag for packaging.The following information is available regarding costs: Kandy applied overhead at a rate of $9.40 per direct labor hour, and fringe benefits for workers are an additional 20% of wages.What is the standard price and standard quantity for manufacturing overhead?
A)$11.28; 0.25 hour
B)$9.40; 0.25 hour
C)$2.35; 1 hour
D)$2.82; 0.25 hour

Question

Kandy Harts manufactures custom T-shirts.Each T-shirt can be imprinted front and back with photos, company logos or other information.Each T-shirt requires 2 ounces of ink, 15 minutes of direct labor (processing, folding, packaging), and a plastic bag for packaging.The following information is available regarding costs:  Kandy applied overhead at a rate of $9.40 per direct labor hour, and fringe benefits for workers are an additional 20% of wages.What is the standard price and standard quantity for manufacturing overhead?
A)$11.28; 0.25 hour 
B)$9.40; 0.25 hour 
C)$2.35; 1 hour 
D)$2.82; 0.25 hour

Quizplus · Accepted Answer

To find the standard price and quantity of manufacturing overhead, we need to calculate the total overhead cost and divide it by the total direct labor hour.

Total direct labor hour = 15 minutes/60 minutes = 0.25 hour

Direct labor cost = 0.25 hour x $16.20/hour = $4.05

Fringe Benefits for workers = 20% x $4.05 = $0.81

Total direct labor cost = $4.05 + $0.81 = $4.86

Total overhead cost = Total cost - (Direct labor cost + Direct material cost)

= $17.00 - ($4.86 + $0.20)

= $11.94

Standard price of manufacturing overhead = Total overhead cost / Total direct labor hour

= $11.94 / 0.25 hour

= $47.76/hour

Standard quantity of manufacturing overhead = 1 hour

Therefore, the best choice is B) $9.40; 0.25 hour.

Kandy Harts Manufactures Custom T-Shirts