(Appendix 11A)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:
A)$31, 500
B)$30, 625
C)$32, 375
D)$33, 250

Question

Quizplus · Accepted Answer

Fixed overhead applied to work in process = $3.50 per DLH × 3.0 DLHs per unit × 3, 000 units = $31, 500
Volume variance = Budgeted fixed overhead - Fixed overhead applied to work in process
$875 F = Budgeted fixed overhead - $31, 500
-$875 = Budgeted fixed overhead - $31, 500
Budgeted fixed overhead = $31, 500 - $875 = $30, 625

(Appendix 11A)The Claus Corporation Makes and Sells a Single Product