(Appendix 11A)At the beginning of last year, Tari Corporation budgeted $300, 000 of fixed manufacturing overhead and chose a denominator level of activity of 600, 000 machine-hours.At the end of the year, Tari's fixed manufacturing overhead budget variance was $9, 000 favorable.Its fixed manufacturing overhead volume variance was $15, 000 favorable.Actual direct labor-hours for the year were 625, 000.What was Tari's total standard machine-hours allowed for last year's output?
A)570, 000
B)630, 000
C)648, 000
D)656, 250

Question

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $300, 000 ÷ 600, 000 machine-hours = $0.50 per machine-hour
Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output)
$15, 000 F = $0.50 per machine-hour × (600, 000 machine-hours - Standard hours allowed for the actual output)
-$15, 000 = $0.50 per machine-hour × (600, 000 machine-hours - Standard hours allowed for the actual output)
-$15, 000 = $300, 000 - ($0.50 per machine-hour × Standard hours allowed for the actual output)
$0.50 per machine-hour × Standard hours allowed for the actual output = $300, 000 + $15, 000
$0.50 per machine-hour × Standard hours allowed for the actual output = $315, 000
Standard hours allowed for the actual output = $315, 000 ÷ $0.50 per machine-hour
Standard hours allowed for the actual output = 630, 000 machine-hours

(Appendix 11A)At the Beginning of Last Year, Tari Corporation Budgeted