Question

The standard cost card for the single product manufactured by Cutter, Inc., is given below or Rate Standard Standard Quantity Price or Hours 3.6 yards $ 3.8 per yard rs 16.00 per hour 8.T hours $ 2.0 per hour 8.7 hours $5.00 per hour 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 .460 hours and manufactured 11,800 units of product Selected data relating to the company's fixed manufacturing overhead cost for the year are shown below Actual Aplied to $40.es Budget variance, Ve Required: 1 What were the standard hours allowed for the year's production? 2. What was the amount of budgeted overhead cost for the year? 3. What was the feed overhead budget variance for the year indicate the effect of each variance by selecting for unfavorable, and "None for no efecte.rere variance Input all amounts as positive values.) 4. What denominator activity level of the company use in setting the predetermined Overhead rate for the year!

Answer 1

Solution 1:

Standard hours allowed for actual production = 11800*0.7 = 8260 hours

Solution 2:

Fixed overhead applied = 8260 * $5 = $41,300

Budgeted fixed overhead cost = Fixed overhead applied - Favorable volume variance

= $41,300 - $3,000 = $38,000

Solution 3:

Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead = $38,000 - $40,000 = $2,000 U

Solution 4:

Denominator level of activity = $38,000 / $5 = 7600 DLH