question archive Required information The Claus Company makes and sells a single product and uses standard costing
Required information The Claus Company makes and sells a single product and uses standard costing
Subject:AccountingPrice:4.89 Bought3
Required information
The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following:
Variable Factory Overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed Factory Overhead: 3.0 DLHs. @ $3.50 per DLH.
For January, the company incurred $22,000 of actual fixed overhead costs and recorded an $875 favourable volume variance.
What was the budgeted fixed factory overhead cost for January?
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Budgeted fixed overhead = $ 30,625
Total fixed overhead applied = Units * DLHs used * DLHs per unit
Total fixed overhead applied= 3,000 * 3 * 3.50 = 31,500
Volume variance = Budgeted Fixed overhead - Actual fixed overhead applied
(875) = Budgeted fixed overhead - 31,500
Budgeted fixed overhead = (875) + 31,500 = $ 30,625
