Reference: 11-03
the Albright Company Uses Standard Costing and Has

question 9

Multiple Choice

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-Paul Co. direct labour-hours. For April, total fixed overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour-hours for the month. The following data are available for April's activity: $$\begin{array} { | l | l | } \hline \text { Number of units produced } & 9,500 \\\hline \text { Direct labour-hours worked } & 19,500 \\\hline \text { Actual total fixed overhead cost incurred } & \$ 79,500 \\\hline\end{array}$$ What amount of total fixed overhead cost would have been applied to production for the month of April?

• A)$80,000.
• B)$79,500.
• C)$78,000.
• D)$76,000.

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Definitions:

Natural Resources

Materials or substances such as minerals, forests, water, and fertile land occurring in nature, which can be used for economic gain.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, listing assets, liabilities, and shareholders' equity at a specific point in time.

Intangible Assets

Non-physical assets that provide economic benefits to a company, such as trademarks, patents, and goodwill.

Amortized

The process of gradually writing off the initial cost of an asset or loan over a period, in regular installments.