Pierce Corporation Uses a Standard Cost System in Which It

question 13

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:

Volleyball

A team sport where two teams, typically of six players each, compete to ground a ball on the other team's court under organized rules.

Labor-Leisure Tradeoff

The balance individuals must find between time spent working, which earns income, and time spent enjoying leisure activities.

Substitution Effect

The change in consumption resulting from a change in the relative prices of goods, prompting consumers to replace more expensive items with less costly alternatives.

Income Effect

The shift in income for an individual or the economy, and its influence on the demand for a specific good or service.