Question

The standard cost card for the single product manufactured by Cutter, Inc., is given below: (2) Standard (1) Standard Standard Quantity or Hours 3.8 yards Price Cost Inputs Direct materials or Rate (1) x (2) $15.20 4.00 per yard $ 17.00 per hour $3.00 per hour 6.00 per hour Direct labor 0.9 hours 15.30 Variable overhead 0.9 hours 2.70 Fixed overhead 0.9 hours 5.40 $38.60 Total standard cost per unit Manufacturing overhead is applied to production on the basis of standard direct labor-hours. During the year, the company worked 9,470 hours and manufactured 10,300 units of product. Selected data relating to the company's fixed manufacturing overhead cost for the year are shown below: Fixed Overhead Actual Applied to Work in Fixed Overhead Budgeted Fixed Overhe ad Process ? hours x $? per hour =$? $48,000 Volume variance, $8,820 F Budget variance, $?

Answer 1

(1)standard hours allowed for year's production

= 10300 units*0.9hours per unit

=9270 Hours

(2)Budgeted fixed overhead cost

fixed overhead applied to work in process-volume variance (as it is favorable we will minus it)

9270hours *6$ per hour - 8820

55620-8820

=46800$

(3)budget variance

Actual fixed overhead -budgeted fixed overhead cost

48000-46800

=1200$ Unfavorable

(4)denominator activity

fixed overhead rate = budgeted fixed overhead cost / denominator activity

6$= 46800$/ denominator activity

denominator activity = 46800/6

=7800 direct labor hours