Chapter 10.A, Problem 5E

EXERCISE 10A−5 Using Fixed Overhead Variances LO10−4
The standard cost card for the single product manufactured by Cutter, Inc., is given below:

Manufacturing overhead is applied to production on the basis of standard direct labor-hours. During the year, the company worked 37,000 hours and manufactured 9,500 units of product. Selected data relating to the company’s fixed manufacturing overhead cost for the year are shown below.

Required:

1. What were the standard hours allowed for the year’s production?
2. What was the amount of budgeted fixed overhead cost for the year?
3. What was the fixed overhead budget variance for the year?
4. What denominator activity level did the company use in setting the predetermined overhead rate for the year?