Pierce Corporation Uses a Standard Cost System in Which It

question 104

Essay

Pierce Corporation uses a standard cost system in which it applies manufacturing overhead to its product on the basis of standard direct labor-hours (DLHs). Below is the standard cost card for the product: Last year, the company produced 6,000 units of product using 17,000 direct labor-hours. The actual total fixed manufacturing overhead cost for the year was $140,000 and the volume variance was $12,000, favorable.
Required:
a. Determine the budgeted amount of total fixed manufacturing overhead cost.
b. Determine the denominator activity figure that the company used in computing predetermined overhead rates.

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Definitions:

Rogier Van Der Weyden

A prominent Northern Renaissance painter known for his detailed portraits and religious compositions, active in the 15th century.

Duke Philip the Bold

A prominent figure from the Valois Dynasty in France, serving as Duke of Burgundy from 1363 until his death in 1404 and known for his influence in politics and the arts.

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, typically used as an indicator of inflation.

Inflation Rate

The rate in percentage terms that indicates how quickly the average price level of goods and services escalates, diminishing the buying power.