The Tate Company Uses a Standard Costing System in Which

question 32

Multiple Choice

The Tate Company uses a standard costing system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs) . The company recorded the following costs and activity for September:

$\begin{array}{l}\begin{array} { | l | r | } \hline \text { Cost: } & \\\hline \text { Actual Fixed Overhead Costs Incurred } & \$ 61,400 \\\hline \text { Volume Variance } & \$ 2,850 \text { unfavourable } \\\hline \text { Fixed Portion of the Predetermined Overhead Rate } & \$ 0.95 \text { per DLH } \\\hline\end{array}\\\\\begin{array} { | l | r | } \hline \text { Activity: } & \\\hline \text { Number of Units Completed } & 22,800 \\\hline \text { Standard Direct Labour Hours Allowed per Unit of Product } & 2.5 \text { DLHs } \\\hline \text { Denominator Activity } & 60,000 \text { DLHs } \\\hline\end{array}\end{array}$

-What was the amount of fixed overhead cost contained in the company's flexible budget for manufacturing overhead for September?

• A) $57,000.
• B) $58,550.
• C) $60,000.
• D) $61,400.

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Definitions:

Procedural Justice

The fairness of the processes that are used to make decisions within organizations, which can affect perceptions of fairness and employee satisfaction.

Appeal Process

A formal procedure allowing individuals to challenge or dispute decisions or outcomes within organizational or legal contexts.

Pay Increase

An adjustment to an employee's base salary, usually upward, to reflect changes in market conditions, performance or inflation.

Classical Management Strategy

A theory of management that focuses on organizational efficiency and effectiveness through strict planning, organizing, leading, and controlling.