Asked by Maryana Bilska on May 13, 2024
Verified
Dori Castings is a job order shop that uses a standard cost system.Manufacturing overhead costs are applied on the basis of standard direct labor-hours. The amount of fixed manufacturing overhead that Dori would apply to finished production would be:
A) the actual direct labor-hours times the standard fixed manufacturing overhead rate per direct labor-hour.
B) the standard hours allowed for the actual units of finished output times the standard fixed manufacturing overhead rate per direct labor-hour.
C) the standard units of output for the actual direct labor-hours worked times the standard fixed manufacturing overhead rate per unit of output.
D) the actual fixed manufacturing overhead cost per direct labor-hour times the standard hours allowed.
Standard Cost System
A cost accounting system that uses cost units determined in advance for materials, labor, and overhead to estimate the cost of production.
Fixed Manufacturing Overhead
Regular, consistent expenses related to manufacturing that do not vary with the level of production, such as rent, salaries, and insurance.
- Recognize how standard costing systems apply fixed and variable manufacturing overhead costs to products.
Verified Answer
MA
Mostafa Abdel HadiMay 17, 2024
Final Answer :
B
Explanation :
The amount of fixed manufacturing overhead that Dori would apply to finished production would be the standard hours allowed for the actual units of finished output times the standard fixed manufacturing overhead rate per direct labor-hour. This is because the standard hours allowed is the amount of time that should be taken to manufacture the actual units of output based on the standard cost system, and the fixed manufacturing overhead is applied based on standard direct labor-hours. Therefore, multiplying the standard hours allowed by the standard fixed manufacturing overhead rate per direct labor-hour would give the amount of fixed manufacturing overhead that should be applied to the finished production.
Learning Objectives
- Recognize how standard costing systems apply fixed and variable manufacturing overhead costs to products.