Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each unit requires two standard hours of labour for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at £900,000 for the year, and the fixed overhead rate was £3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below:$$\begin{array} { l l }
\text { Actual production } & 198,000 \text { units } \
\text { Actual direct labour-hours } & 440,000 \text { direct labour-hours } \
\text { Actual variable overhead } & £ 352,000 \
\text { Actual fixed overhead } & £ 575,000
\end{array}$$
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The fixed overhead applied to Franklin's production for the year is

A)£484,200.
B)£575,000.
C)£594,000.
D)£600,000.

Question

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each unit requires two standard hours of labour for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at £900,000 for the year, and the fixed overhead rate was £3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below:$$\begin{array} { l l } 
\text { Actual production } & 198,000 \text { units } \
\text { Actual direct labour-hours } & 440,000 \text { direct labour-hours } \
\text { Actual variable overhead } & £ 352,000 \
\text { Actual fixed overhead } & £ 575,000
\end{array}$$
-
The fixed overhead applied to Franklin's production for the year is

A)£484,200.
B)£575,000.
C)£594,000.
D)£600,000.

Quizplus · Accepted Answer

The fixed overhead applied to production is based on the standard cost system, which applies overhead on a per unit basis. With a fixed overhead rate of £3.00 per unit and budgeted production of 200,000 units, the total applied fixed overhead is £3.00 * 198,000 units (actual production) = £594,000.

Franklin Glass Works Uses a Standard Cost System in Which