Reference no: EM132612835
The SCC Division of the Big-Drug Company uses standard costing to help control their production costs. The division's main product is a pharmaceutical product that comes in a multi-dose package.
The standard variable costs per package are given below:
Direct materials (chemical ingredients 1.25 ounces @$1.00 per ounce)
Direct materials (packaging 1 package piece @$0.45 per package piece)
Direct labor (0.40 hour @ $18.00 per hour)
Variable overhead ($1.50 per direct labor hour)
Fixed overhead ($2.00 per direct labor hour)
During the most recent month, 100,000 packages of the product were produced. Other salient information related to the production of the 100,000 packages follows:
Actual variable overhead $58,000
Actual fixed overhead $87,000
Actual direct labor hours 40,200
Actual direct labor hourly rate $17.90
DM chemicals purchase price $1.01
DM chemicals purchase quantity 140,000
DM packages purchase price $0.46
DM packages purchase quantity 104,000
DM chemicals used 135,000
DM packages used 102,000
Fixed Overhead Budget $85,000
1. DM chemical purchase price variance
2. DM chemical efficiency (quantity) variance
3. DM packaging purchase price variance
4. DM packaging efficiency (quantity) variance
5. Direct Labor rate variance
6. Direct Labor efficiency variance
7. The variable overhead spending variance
8. The variable overhead efficiency variance
9. The fixed overhead spending variance
Problem 1: If the fixed overhead is applied based on a rate of $2.00 per direct labor hour, then what is the budgeted fixed overhead base (also called the denominator) quantified in terms of finished packages?