The following information relates to a given department of Mervi Company for the first quarter of 2018: Actual total overhead (fixed plus variable) P 178,500 Budget formula: Total FOH Cost = P 110,000 + 0.50/hr Total overhead application rate P 1.50 per hour  Spending variance (from three way)   8,000 UF Volume variance (from two way) 5,000 F Each unit takes five hours to manufacture and selling price is P 4.50 per unit. Based on the overhead budget formula, how many units must be sold to generate P 30,000 more than total budgeted overhead costs?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 7EA: A company estimates its manufacturing overhead will be $750,000 for the next year. What is the...
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The following information relates to a given department of Mervi Company for the first quarter of 2018:

Actual total overhead (fixed plus variable) P 178,500

Budget formula:

Total FOH Cost = P 110,000 + 0.50/hr

Total overhead application rate P 1.50 per hour 
Spending variance (from three way)   8,000 UF
Volume variance (from two way) 5,000 F

Each unit takes five hours to manufacture and selling price is P 4.50 per unit. Based on the overhead budget formula, how many units must be sold to generate P 30,000 more than total budgeted overhead costs?
a. 27,500

b. 35,000

c. 55,000

d. 70,000

 

 

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