The Claus Corporation Makes and Sells a Single Product and Uses

question 17

Multiple Choice

The Claus Corporation makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following:

Variable factory overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH.

For January, the company incurred $22,000 of actual fixed manufacturing overhead costs and recorded a $875 favorable volume variance.

-The fixed manufacturing overhead cost used to compute the predetermined overhead rate was:

• A)$31,500
• B)$30,625
• C)$32,375
• D)$33,250

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Definitions:

Fiscal Deficit

The financial shortfall when a government's expenditures exceed its revenue.

International Monetary Fund

An international organization created for the purpose of promoting global monetary and exchange stability, facilitating the expansion and balanced growth of international trade, and assisting in the establishment of a multilateral system of payments for current transactions.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Price Level

The central value of current prices for each good and service in the economy.