The Claus Company Makes and Sells a Single Product and Uses

question 6

Multiple Choice

The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following:

Variable Factory Overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed Factory Overhead: 3.0 DLHs. @ $3.50 per DLH.

For January, the company incurred $22,000 of actual fixed overhead costs and recorded an $875 favourable volume variance.




-What was the budgeted fixed factory overhead cost for January?

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Definitions:

Purchased Units

Units of goods or services acquired through purchase, often used to refer to inventory items bought for resale in business operations.

Perpetual Moving Average

A method in inventory management where the average cost of inventory is recalculated after each acquisition or sale, ensuring up-to-date and accurate inventory valuations.

Ending Inventory

The total value of all the inventory a company has on hand at the end of its fiscal period, computed under specific costing methods.

Purchase Units

These are quantities of goods a company acquires to sell in the course of business.