The Forbes Corporation uses a standard cost system in which overhead costs are applied to products on the basis of standard direct labor-hours (DLHs).The following data applied to the company's activities for June: The fixed component of the predetermined overhead rate for June is:
A)$3.00 per DLH
B)$3.23 per DLH
C)$3.78 per DLH
D)$3.46 per DLH

Question

The Forbes Corporation uses a standard cost system in which overhead costs are applied to products on the basis of standard direct labor-hours (DLHs).The following data applied to the company's activities for June:  The fixed component of the predetermined overhead rate for June is:
A)$3.00 per DLH 
B)$3.23 per DLH 
C)$3.78 per DLH 
D)$3.46 per DLH

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead
$11,450 U = $161,450 - Budgeted fixed overhead
$11,450 = $161,450 - Budgeted fixed overhead
Budgeted fixed overhead = $161,450 - $11,450
Budgeted fixed overhead = $150,000
Fixed component of the predetermined overhead rate = Estimated fixed overhead cost ÷ Estimated total amount of the allocation base = $150,000 ÷ 50,000 DLHs = $3 per DLH

The Forbes Corporation Uses a Standard Cost System in Which