Flick Company Uses a Standard Cost System

question 2

Essay

Flick Company uses a standard cost system.Manufacturing overhead is applied to units of product on the basis of direct labour 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 overhead.The predetermined overhead rate,including both fixed and variable components,is $2.50 per direct labour hour.The standards call for two direct labour hours per unit of output produced.Last year,the company produced 11,500 units of product and worked 22,000 direct labour hours.Actual costs were $22,500 for variable overhead and $31,000 for fixed 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 spending variance?
d)What was the variable overhead efficiency variance?
e)What was the fixed overhead budget variance?
f)What was the fixed overhead volume variance?

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Definitions:

Confounded

Mixed or muddled feelings or situations where the cause and effect become unclear or complicated.

Independent Variable

In an experimental setting, the variable that is manipulated or changed to observe its effect on a dependent variable.

Decision-making Experiment

An experimental setup designed to understand how individuals make choices under various conditions.

Experimental Method

A scientific procedure undertaken to discover information or to test a hypothesis by varying conditions and observing the outcomes.