Question

for 1 unit of product include 2 pounds of material and 1.5 labor hours. the standard rates are $2 per pound and $7 per hour. the standard variable overhead rate is $8 per direct labor hour.

the standard variable overhead cost per unit is: $...?

Answer 1

1 unit required 2 pounds of materials and 1.5 direct labor hours

Standard rate for materials = $2 per pound

Standard rate for labor = $7 per hour

Standard material cost per unit = Number of pounds x Rate per pound

= 2 x 2

= $4

Standard labor cost per unit = Labor hours per unit x Standard rate for labor

=1.5 x 7

= $10.5

Standard variable overhead cost per unit = Standard material cost per unit + Standard labor cost per unit

= 4+10.5

= $14.5

The standard variable overhead cost per unit is = $14.5

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