The Murray Company Makes and Sells a Single Product -What Was the Amount of Fixed Overhead Contained in the Company

question 176

Multiple Choice

The Murray Company makes and sells a single product. The company recorded the following activity and cost data for May:
$\begin{array}{l}\begin{array} { | l | r | } \hline \text { Number of Units Completed } & 45,000 \text { units } \\\hline \text { Standard Direct Labour Hours Allowed per Unit of Product } & 1.5 \text { DLHS } \\\hline \text { Budgeted Direct Labour Hours (denominator activity) } & 72,000 \text { DLHS } \\\hline \text { Actual Fixed Overhead Costs Incurred } & \$ 66,000 \\\hline \text { Volume Variance } & \$ 4,4275 \text { unfavourable } \\\hline\end{array}\\\text { The fixed portion of the predetermined overhead rate is } \$ 0.95 \text { per direct labour hour. }\end{array}$



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

• A) $64,125.
• B) $67,500.
• C) $68,400.
• D) $70,275.

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Definitions:

Property Tax Rates

The percentage at which local governments tax the value of real estate properties.

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales volume, such as rent or insurance.

Break-even Point

The point at which a company's revenue equals its expenses, resulting in no net loss or gain.

Contribution Margin Ratio

This ratio measures how much of a company's revenues will contribute to covering its fixed costs and generating profit, after variable costs have been paid.