The Hawkins Company uses a standard costing system in which manufacturing overhead is applied on the basis of standard direct labor-hours (DLHs). During February, the company actually used 9,200 direct labor-hours and made 2,900 units of finished product. The standard cost card for one unit of product includes the following:

Variable factory overhead: 3 DLHs $4.75 per DLH
Fixed factory overhead: 3 DLHs $3.00 per DLH

For February, the company incurred $28,450 in fixed manufacturing overhead costs and recorded a $900 favorable volume variance.

-The amount of fixed manufacturing overhead cost contained in the company's budget for February is:
A)$27,000
B)$27,550
C)$25,200
D)$29,350

Question

The Hawkins Company uses a standard costing system in which manufacturing overhead is applied on the basis of standard direct labor-hours (DLHs). During February, the company actually used 9,200 direct labor-hours and made 2,900 units of finished product. The standard cost card for one unit of product includes the following:

Variable factory overhead: 3 DLHs   $4.75 per DLH
Fixed factory overhead: 3 DLHs   $3.00 per DLH

For February, the company incurred $28,450 in fixed manufacturing overhead costs and recorded a $900 favorable volume variance.

-The amount of fixed manufacturing overhead cost contained in the company's budget for February is:
A)$27,000
B)$27,550
C)$25,200
D)$29,350

Quizplus · Accepted Answer

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
$900 F = Budgeted fixed overhead cost - (2,900 units F1F1F1S1F1F1F10 3 hours per unit F1F1F1S1F1F1F10 $3 per hour)
-$900 = Budgeted fixed overhead cost - $26,100
Budgeted fixed overhead cost = $26,100 - $900 = $25,200

The Hawkins Company Uses a Standard Costing System in Which