The Claus Corporation makes and sells a single product and uses standard costing
ID: 2484942 • Letter: T
Question
The Claus Corporation makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following:
Variable factory overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH.
For January, the company incurred $22,000 of actual fixed manufacturing overhead costs and recorded a $875 favorable volume variance.
The fixed manufacturing overhead cost used to compute the predetermined overhead rate was:
$31,500
$30,625
$32,375
$33,250
Please show all work
$31,500
$30,625
$32,375
$33,250
Please show all work
Explanation / Answer
PREDETERMINED FIXED MANUFACTURING OVERHEAD RATE
= TOTAL PREDETERMINED FIXED OVERHEAD / PREDETERMINED DIRECT LABOUR HOUR
$3.5 = TOTAL PREDETERMINED FIXED OVERHEAD / (3000 * 3)
TOTAL PREDETERMINED FIXED OVERHEAD = 9000 * $3.5
= $31500