A Furniture Manufacturer Has a Standard Costing System Based on Machine

question 24

Multiple Choice

A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 3,300 \mathrm{MHs} \\\hline \text { Overhead Costs at the Denominator Activity Level: } & \\\hline \text { Variable Overhead Cost } & \$ 31,845 \\\hline \text { Fixed Overhead Cost } & \$ 40,425 \\\hline\end{array}$
The following data pertain to operations for the most recent period:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 3,400 \mathrm{MHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 3,078 \mathrm{MHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 32,980 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 38,975 \\\hline\end{array}$
-What was the total predetermined overhead rate,rounded to the nearest cent?

• A) $21.16.
• B) $21.26.
• C) $21.80.
• D) $21.90.

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Definitions:

Bureaucratic Control

A management system emphasizing strict procedures and rules to maintain order and efficiency.

Normative Control

A management approach that seeks to influence employees' behavior and attitudes through the alignment of organisational norms and values.

Output Control

A management technique focused on measuring and regulating the output of employees or production processes to meet organizational goals.

Network Structure

The arrangement and interconnection of nodes or elements in a system that define how they communicate or relate.