The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs).The company recorded the following activity and cost data for May: The amount of fixed manufacturing overhead cost that was used to compute the fixed component of the predetermined overhead rate was:
A)$54,135
B)$60,150
C)$59,465
D)$57,600

Question

The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs).The company recorded the following activity and cost data for May:  The amount of fixed manufacturing overhead cost that was used to compute the fixed component of the predetermined overhead rate was:
A)$54,135 
B)$60,150 
C)$59,465 
D)$57,600

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = Budgeted fixed overhead ÷ Denominator level of activity
$0.90 per DLH = Budgeted fixed overhead cost ÷ 64,000 DLHs
Budgeted fixed overhead cost = $0.90 per DLH × 64,000 DLHs = $57,600

The Murray Corporation Uses a Standard Cost System in Which