A Manufacturer of Playground Equipment Has a Standard Costing System

question 108

Multiple Choice

A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
The predetermined fixed manufacturing overhead rate is closest to:

• A) $10.15 per MH
• B) $9.56 per MH
• C) $9.65 per MH
• D) $10.06 per MH

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Definitions:

Fixed Production Costs

Costs that do not change with the level of production, such as rent, salaries, and insurance.

Financial Advantage

The benefit gained from making a particular financial decision or investment, often quantified by profits or savings.

Fixed Manufacturing Expenses

Costs that do not vary with production volume, such as rent, salary of permanent staff, and equipment depreciation.

Fixed Selling

Fixed selling refers to the portion of selling costs that remains unchanged regardless of the volume of goods or services sold.