A manufacturer of playground equipment 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: The fixed manufacturing overhead applied to products during the period is closest to:
A)$40,650
B)$42,981
C)$41,600
D)$46,070

Question

A manufacturer of playground equipment 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:  The fixed manufacturing overhead applied to products during the period is closest to:
A)$40,650 
B)$42,981 
C)$41,600 
D)$46,070

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $40,650 ÷ 3,000 MHs = $13.55 per MH
Fixed manufacturing overhead applied = Predetermined overheard rate × Standard hours allowed for the actual output = $13.55 per MH × 3,172 MHs = $42,980.60

A Manufacturer of Playground Equipment Uses a Standard Costing System