A Manufacturer of Industrial Equipment Has a Standard Costing System

question 152

Multiple Choice

A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 8,000 \mathrm{DLHs} \\\hline \text { Overhead Costs at the Denominator Activity Level: } & \\\hline \text { Variable Overhead Cost } & \$ 56,400 \\\hline \text { Fixed Overhead Cost } & \$ 100,800 \\\hline\end{array}$
The following data pertain to operations for the most recent period:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 7,800 \mathrm{DLHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 7,735 \mathrm{DLHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 54,210 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 100,200 \\\hline\end{array}$
-How much overhead was applied to products during the period,rounded to the nearest dollar?

• A) $151,993.
• B) $153,270.
• C) $154,410.
• D) $157,200.

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Definitions:

Exclusive Dealing

A contractual arrangement in which a seller agrees to sell its products to only one particular buyer, or a buyer agrees to purchase from only one seller, limiting competition.

Tying Arrangements

A business practice where a seller requires the buyer to purchase other products as a condition of getting the desired product.

Federal Trade Commission

A U.S. federal agency tasked with consumer protection and the prevention of anti-competitive business practices.

Sherman Act

A landmark federal statute in the antitrust law of the United States, passed in 1890, which prohibits monopolistic practices and promotes competition.