Deskins Clothiers is a small company that manufactures tall men’ssuits. The company has used a standard cost system. In May 2008,11,200 suits were produced. The following standard and actual costdata applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.
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Standard (per unit) |
Actual |
| Direct materials | 8 yards at $4.30 per yard | $371,050 for 90,500 yards ($4.10 per yard) |
| Direct labor | 1.2 hours at $13.50 per hour | $201,630 for 14,300 hours ($14.10 per hour) |
| Overhead | 1.2 hours at $6.00 per hour | $49,000 fixed overhead $37,000 varibale overhead |
| (fixed $3.30; variable $2.50) |
Overhead is applied on the basis of direct labor hours. Atnormal capacity, budgeted fixed overhead costs were $49,000, andbudgeted variable overhead was $35,000.
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