The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour 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 overhead costs and recorded an $875 favourable volume variance.

-What was the budgeted fixed factory overhead cost for January?
A) $30,625.
B) $31,500.
C) $32,375.
D) $33,250.

Question

The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour 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 overhead costs and recorded an $875 favourable volume variance.

-What was the budgeted fixed factory overhead cost for January?
A) $30,625.
B) $31,500.
C) $32,375.
D) $33,250.

Quizplus · Accepted Answer

The budgeted fixed factory overhead cost for January is $30,625. This is calculated by multiplying the standard fixed factory overhead rate of $3.50 per DLH by the budgeted direct labour hours of 8,700 DLHs.

The Claus Company Makes and Sells a Single Product and Uses