A Furniture Manufacturer Has a Standard Costing System Based on Machine

question 131

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:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 3,400 \mathrm{MHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 3,078 \mathrm{MHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 32,980 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 38,975 \\\hline\end{array}$
-How much overhead was applied to products during the period,rounded to the nearest dollar?

• A) $67,408.
• B) $71,955.
• C) $72,270.
• D) $74,460.

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Definitions:

Conversion Costs

Expenses in manufacturing that include both labor costs and overhead costs associated with converting raw materials into finished goods.

Equivalent Units

A method used in process costing that converts partially completed units into a smaller number of fully completed units.

Molding Department

A specialized section within a manufacturing facility where the shaping or forming of materials into products takes place, often involving processes like injection molding or casting.

Work In Process

Refers to the goods that are in the manufacturing process but are not yet complete; it's an inventory account on the balance sheet.