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

The fixed manufacturing overhead rate per unit is calculated as follows:
Fixed manufacturing overhead rate per unit = Total fixed manufacturing overhead / Total units of production
= ($170,000 + $75,000) / 5,000
= $45

Now, the fixed manufacturing overhead applied to products = Fixed manufacturing overhead rate per unit x Total units produced
= $45 x 955
= $42,975

The closest option is B: $42,981.

A Manufacturer of Playground Equipment Uses a Standard Costing System