Crawford Company's Standard Fixed Overhead Cost Is $6 Per Direct

question 124

Multiple Choice

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is the activity level on which Crawford based its fixed overhead rate?

• A) 110,000 direct labor hours
• B) 105,000 direct labor hours
• C) 100,000 direct labor hours
• D) 50,000 direct labor hours

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Definitions:

Journal Entry

A recording in the accounting books of a business transaction expressed in terms of debits and credits.

Correction Journal Entry

A correction journal entry is used to amend errors or omissions in the financial accounting records of a business.

Ledger Accounts

Records that summarize transactions related to a specific asset, liability, equity, revenue, or expense, forming the backbone of the double-entry bookkeeping system.

Journal Entries

Records of the financial transactions of a business that are entered into its accounting system.