Clean sweep company produces
all-vinyl mats. Each doormat calls for .5 meter of vinyl material. The material
should cost $3 per meter. Standard direct labor hours and labor cost per
doormat are .3 hour and $6 (.3 X$20 per hour).
Currently the standard
variable overhead rate is $1.5 per direct labor hour, and its standard fixed
overhead rate is .8 per direct labor hour.
August, the division manufactured and sold 50,000 doormats. Duing the month, it
used 25,200 meters of vinyl material; the total cost of the material was
The total overhead costs for
August were $28,200, of which $18,200 was variable.
The total number of direct
labor hours worked was 10,800 and the factory payroll for direct labor for the
month was $214,920. Budgeted fixed overhead for August was $9,280. Normal
monthly capacity for the year was set at 58,000 doormats.