Colina Production Company Uses a Standard Costing System The Factory Overhead Rate Is Based on an Activity Level

question 76

Multiple Choice

Colina Production Company uses a standard costing system. The following information pertains to the current year. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array}{ll}\text { Actual production } & 5,500 \text { units } \\\text { Actual factory overhead costs ( } \$ 16,500 \text { is fixed) } & \$ 40,125 \\\text { Actual direct labor costs }(11,250 \text { hours) } & \$ 131,625 \\\text { Standard direct labor for } 5,500 \text { units: } & \\\text { Standard hours allowed } & 11,000 \text { hours } \\\text { Labor rate } & \$ 12.00\end{array}$
The factory overhead rate is based on an activity level of 10,000 direct labor hours. Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & 13,500 \\\text { Total factory overhead } & \mathbf{\underline { 36 , 0 0 0 }}\end{array}$ What is the fixed overhead volume variance for Colina Production Company?

• A)$3,600 (F)
• B)$1,350 (F)
• C)$4,125 (U)
• D)$1,350 (U)

Identify the characteristics and management of open and closed systems.

Explain the role of network models in project management.

Describe the principles of contingency thinking and its application in management.

Understand the concept of total quality management (TQM) and its principles.

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