Flick Company Uses a Standard Cost System in Which Manufacturing

question 1

Essay

Flick Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours. The company's total budgeted variable and fixed manufacturing overhead costs at the denominator level of activity are $20,000 for variable overhead and $30,000 for fixed manufacturing overhead. The predetermined overhead rate, including both fixed and variable components, is $2.50 per direct labor-hour. The standards call for two direct labor-hours per unit of output produced. Last year, the company produced 11,500 units of product and worked 22,000 direct labor-hours. Actual costs were $22,500 for variable overhead and $31,000 for fixed manufacturing overhead.
Required:
a. What is the denominator level of activity?
b. What were the standard hours allowed for the output last year?
c. What was the variable overhead rate variance?
d. What was the variable overhead efficiency variance?
e. What was the fixed manufacturing overhead budget variance?
f. What was the fixed manufacturing overhead volume variance?

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Definitions:

Alveoli

Tiny air sacs in the lungs where the exchange of oxygen and carbon dioxide takes place, crucial for the respiratory process.

Gas Exchange

The biological process through which gases (such as oxygen and carbon dioxide) move between the environment and the bloodstream, typically through the lungs or gills.

Bronchioles

Small passages in the lungs that lead from the bronchi to the alveoli, facilitating the movement of air in and out of the lungs.

Hypoventilates

To breathe at an abnormally slow rate, leading to increased carbon dioxide levels in the blood, potentially causing respiratory acidosis.