Asked by Yanisa Silalai on May 27, 2024
Verified
The Marlow Corporation uses a standard cost system and applies manufacturing overhead to products on the basis of standard direct labor-hours.The denominator activity is set at 40,000 direct labor-hours per year.Budgeted fixed manufacturing overhead cost is $40,000 per year, and 0.5 direct labor-hours are required to manufacture one unit.The standard cost card would indicate fixed manufacturing overhead cost per unit to be:
A) $1.00
B) $2.00
C) $1.50
D) $0.50
Direct Labor-Hours
A measure of the total hours worked by employees who are directly involved in the manufacturing or production process.
Fixed Manufacturing Overhead
The portion of manufacturing overhead costs that remain constant regardless of the level of production, such as rent and salaries of permanent staff.
Denominator Activity
In managerial accounting, a measure of activity used to allocate fixed costs to cost objects.
- Incorporate the designated overhead rate into cost estimations.
- Analyze the contrast between the permanent and adaptable components of the designated overhead rate.
Verified Answer
Learning Objectives
- Incorporate the designated overhead rate into cost estimations.
- Analyze the contrast between the permanent and adaptable components of the designated overhead rate.
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