Question

national pottery makes handmade clay pots. the company anticipates $3,187,219 of manufacturing overhead in the coming year. because it is a labor-intensive organization, national pottery bases overhead allocation on direct labor cost. the direct labor quantity standard is 2.7 hours per pot, and the standard direct labor rate is $22.50 per hour. the anticipated direct labor cost for the year is $3,375,000. variable overhead is expected to be $2,162,350. what is the standard fixed overhead cost per pot? round your answer to the nearest cent.

Answer 1

$18.45

Step-by-step explanation:

Standard anticipated fixed overhead cost = $3,187,219 - $2,162,350 = $1,024,869

Predetermined fixed overhead rate = $1,024,869/$3,375,000 = 30% of direct labour cost

Direct labour costs per pot = $22.50 per DLH x 2.7 DLH per pot = $60.75

Standard fixed overhead per pot = $60.75 x 30% = $18.45 (rounded).