Reference no: EM132724785
Question - Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
Direct material: 5 pounds at $10.00 per pound $50.00
Direct labor: 2 hours at $15 per hour 30.00
Variable overhead: 2 hours at $5 per hour 10.00
Total standard variable cost per unit $90.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per Month Variable Cost per Unit Sold
Advertising $400,000
Sales salaries and commissions $500,000 $32.00
Shipping expenses $23.00
The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,600 units and incurred the following costs:
1. Purchased 200,000 pounds of raw materials at a cost of $9.40 per pound. All of this material was used in production.
2. Direct-laborers worked 50,000 hours at a rate of $16.00 per hour.
3. Total variable manufacturing overhead for the month was $558,750.
4. Total advertising, sales salaries and commissions, and shipping expenses were $407,000, $555,000, and $315,000, respectively.
What direct labor cost would be included in the company's flexible budget for March?