The standard cost card for the single product manufactured by Cutter, Inc., is g

Question

The standard cost card for the single product manufactured by Cutter, Inc., is given below Standard Cost Card-per Unit Direct materials, 3.8 yards at 53.00 per yard Direct labor, 7 hours at $16.00 per hour Variable overhead, .7 hours at $2.00 per hour Ficed overhend, .7 hours at $5.00 per hour 5 10.80 11.20 1.40 Total standard cost per unit 5 20.80 Manufacturing overhead is applied to production on the basis of standard direct labor-hours. During the year, the company worked 8,460 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 Fixed Overhead Applied to Work in ? hours x 3? per hour 540,000 Required: . What were the standard hours allowed for the year's production? (Round "Standard hours per unit" to 1 decimal place.) Total produced last year Standerd hours per unit DLH per unit 2. What was the amount of budgeted fixed overhead cost for the year?

Explanation / Answer

Computation of Standard Hour Allowed for Production Total Produced last year 11800 Standard Hour Per Unit 0.7 Hour Standard Hour 8260 Computation of Fixed Overhead Cost Amount of Fixed Overhead Cost in Flexible Budget= Predetermined Overhead RateX Standard Hours Allowed for the year Production = $5X8260= $41300 Computation of Fixed Overhead Budget Variance Fixed Overhead Budget Variance= Actual Fixed Overhead- Budgeted Fixed Overhead*** =$40000-$44600=$4600 UF ***Fixed Overhead Volume Variance=Budgeted Fixed Overhead-Fixed Overhead Applied to WIP 3300=Budgeted Fixed Overhead Vaiance-41300 Budgeted Fixed Overhead= 41300+3300=$44600 Computation of Denominator Activity at Each Level Denominator activity level=Budgeted Fixed Overhead/Predetermined Overhead Rate =$44600/$5= $8920

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