A Manufacturing Company Uses a Standard Costing System in Which

question 66

Multiple Choice

A manufacturing company uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

• A)$2,565 F
• B)$2,810 F
• C)$225 U
• D)$2,585 F

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Definitions:

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated overhead costs by an allocation base, such as direct labor hours, to allocate overhead costs to products or services.

Manufacturing Overhead

All indirect costs related to the production process, such as the costs of maintenance, supplies, and utilities, excluding direct materials and direct labor.

Direct Labor-Hour

A measure of labor productivity that indicates the amount of labor input in terms of hours for producing one unit of output.

Job-Order Costing

A cost accounting system in which costs are assigned to specific jobs or batches, used in industries where goods or services are produced upon request.