Crawford Company’s Standard Fixed Overhead Cost Is $6 Per Direct

question 33

Multiple Choice

Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.
-Refer to the figure.What is the standard activity level on which Crawford based its fixed overhead rate?

• A)50,000 direct labour hours
• B)100,000 direct labour hours
• C)105,000 direct labour hours
• D)110,000 direct labour hours

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Definitions:

Average Cost

It refers to the total cost per unit produced, calculated by dividing the total cost of production by the number of units produced.

Copper

A reddish-brown, malleable, ductile metallic element used as a conductor of heat and electricity, and in various alloys.

Zinc

A chemical element with symbol Zn and atomic number 30, used primarily for galvanizing steel to protect against corrosion.

Production Function

A mathematical relation that describes the maximum amount of output that can be obtained from a given set of inputs, under certain assumptions.