Skillful Ltd Budgeted $900,000 for Total Overhead

question 102

Multiple Choice

Skillful Ltd budgeted $900,000 for total overhead. The standard variable overhead rate was $1 per direct labour hour, or $3 per unit, based on an anticipated activity level of 300,000 direct labour hours. During the year 110,000 units were produced. Fixed overhead costs incurred were $590,000. The variable overhead budget variance was $5,500 unfavourable, and the actual variable overhead rate was $1.10 per direct labour hour. The standard fixed overhead rate per direct labour hour was:

• A) $1.0
• B) $2.00
• C) $0.50
• D) $5.45

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Definitions:

TFC

Total Fixed Costs, which are the sum of all costs that remain constant regardless of the level of production or output.

TC

In economics, often stands for Total Cost, which is the complete cost of production including both variable and fixed costs.

Total Variable Costs

Total Variable Costs are the cumulative expenses that change in proportion to the level of goods or services produced, including costs such as raw materials and labor.

Total Cost

The sum of all expenses incurred in the production of goods or delivery of services, including fixed and variable costs.