Premier Products SolutionPREMIER PRODUCTS, INC. – SOLUTIONTABLE APRODUCTTotalUnits produced1,0001,0001,0001,000Material$15.00$ 5.00$10.00$ 5.00+ Labor30.0015.0010.00+Variable OH15.00= Total var. cost$60.00$17.50$30.00$22.50+ Fixed overhead$10,000$10,000$12,500$12,500= Unit cost$70.00$27.50$42.50$35.00Selling price$98.00$38.50$59.50$49.00Unit Profit$28.00$11.00$17.00$14.00Mark-onTotal Profit$28,000$11,000$17,000$14,000$70,000The overhead rate for the year is determined by adding together the budgeted variable and fixed overhead costs and dividing this sum by the number of budgeted labor hours. The standard cost of a product is found by multiplying the number of direct labor hours required to manufacture that product by the overhead rate and adding this quantity to the direct labor and material costs.
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