The Malcolm Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). The standards call for 3 hours of direct labor per unit produced. The following data pertain to the company's manufacturing overhead for the month of July:
-The Fixed component of the predetermined overhead rate for June is:
A)$3.11
B)$3.39
C)$3.77
D)$3.00

Question

The Malcolm Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). The standards call for 3 hours of direct labor per unit produced. The following data pertain to the company's manufacturing overhead for the month of July: 
-The Fixed component of the predetermined overhead rate for June is:
A)$3.11 
B)$3.39 
C)$3.77 
D)$3.00

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
$3,250 U = $28,450 - Budgeted fixed overhead cost
$3,250 = $28,450 - Budgeted fixed overhead cost
Budgeted fixed overhead cost = $28,450 - $3,250 = $25,200
Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost F1F1F1S1F1F1F10 Estimated total amount of the allocation base
= $25,200 F1F1F1S1F1F1F10 8,400 hours = $3.00 per hour

The Malcolm Company Uses a Standard Cost System in Which