Chapter 11, Problem 48P

Rutherford Wheel and Axle, Inc. has an automated production process, and production activity is quantified in terms of machine hours. A standard-costing system is used. The annual static budget for 20x1 called for 6,000 units to be produced, requiring 30,000 machine hours. The standard overhead rate for the year was computed using this planned level of production. The 20x1 manufacturing cost report follows.

Rutherford develops flexible budgets for different levels of activity for use in evaluating performance. A total of 6,200 units was produced during 20x1, requiring 32,000 machine hours. The preceding