The Standard Fixed Factory Overhead Rate Is Based on 100

question 13

Multiple Choice

The standard fixed factory overhead rate is based on 100% capacity of 50,000 direct labor hours. The standard costs and the actual costs for factory overhead for the production of 8,000 units during the current month were as follows: $\begin{array}{lll}\$ 120,000 & 40,000 \text { hours at } \$ 3 & \text { Standard: } \\& \text { Factory overhead } & \text { Actual } \\131,200 & \text { (41,000 direct labor hours) } &\end{array}$

If there was a $9,000 unfavorable volume variance for December, what is the standard fixed factory overhead cost rate?

• A) $1.00
• B) $0.90
• C) $2.40
• D) $0.80

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Definitions:

Marginal Cost

The expense associated with creating an extra unit of a product or service.

Marginal Cost

The cost of producing one additional unit of a good or service, often varying with the level of production.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent or salaries.

Total Fixed Costs

The sum of all costs that remain constant regardless of any change in a company's production volume.