Tiara Industries has the following information about its standards and production activity for December: Actual manufacturing overhead cost incurred, $90,000
Variable manufacturing overhead cost @ $5.00 per unit produced
Fixed manufacturing overhead cost @ $3.00 per unit produced
($51,000/17,000 budgeted units)
Actual units produced, 5200
Assume the allocation base for fixed overhead costs is the number of units to be produced.
How much are the standard overhead costs allocated to actual production?
A)$85,000
B)$90,000
C)$136,000
D)$41,600

Question

Quizplus · Accepted Answer

The standard overhead costs allocated to actual production are calculated by multiplying the total standard overhead rate per unit by the actual units produced. The standard overhead rate per unit is the sum of the variable overhead rate ($5.00) and the fixed overhead rate ($3.00), which equals $8.00 per unit. Therefore, for 5,200 units produced, the standard overhead cost is 5,200 units * $8.00/unit = $41,600.

Tiara Industries Has the Following Information About Its Standards and Production