Brodie Co Uses a Standard Job Cost System and a Denominator

question 107

Multiple Choice

Brodie Co. uses a standard job cost system and a denominator volume of 25,000 direct labour hours for allocating overhead. The actual output was 12,000 units, which cost $185,700 for direct labour (23,000 hours) , $27,525 for variable overhead, and $136,400 for fixed overhead. The standard variable overhead per unit is $2 (2 hours @ $1 per hour) , and the standard fixed overhead per unit is $10 (2 hours @ $5 per hour) . All variances are immaterial and are closed to Cost of Goods Sold at the end of the period.
The entry to close the variable overhead variances includes a:

• A) Credit to the variable overhead spending variance for $4,525
• B) Credit to work in process for $24,000
• C) Credit to the variable overhead efficiency variance for $1,000
• D) Debit to Cost of Goods Sold for $5,525

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Definitions:

Rent on Office

The cost incurred for leasing office space, which is considered an operational expense for businesses.

Selling and Administrative Expense

The aggregate of all indirect costs associated with the selling of products and the general operations of a business.

Direct Materials

Raw materials that can be physically and directly associated with the manufacturing of finished goods.

Depreciation

The method of allocating the cost of a tangible asset over its useful life.