A Manufacturing Company Has a Standard Costing System Based on Direct

question 62

Multiple Choice

A manufacturing company has a standard costing system based on direct labour-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{lrr} \text { Denominator level of activity } &3,700&\text { DLHs }\\ \text { Overhead costs at the denominator activity level: } &\\ \text { Variable overhead cost } &£ 28,490\\ \text { Fixed owerhead cost } &£ 47,545\\ \text { The following data pertain to operations for the most recent period:} &\\ \text { Actual hours } &3,900&\text { DLHs }\\ \text { Standard hours 3,900allowed for the actual output } &3,850&\text { DLHs }\\ \text { Actual total variable overhead cost } &£ 29,445\\ \text {Actual total fixed overhead cost } &£47,995 \\\end{array}$


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What is the predetermined overhead rate to the nearest cent

• A)£20.93
• B)£19.86
• C)£19.50
• D)£20.55

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Definitions:

Price Reduction

A decrease in the selling price of a product or service, often to increase demand or sales volume.

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific segment or department within a company.

Net Operating Income

Net operating income reflects a company’s financial performance by showing profit calculated from its core business operations, excluding taxes and interest expenses.

Price Reduction

A decrease in the selling price of a product or service, often used as a strategy to increase demand or sales volume.