The standard cost card for the single product manufactured by Cutter, Inc. is provided below:

Standard Cost Card?Per UnitDirect materials, 3 metres at $7.50 per metre................................................$22.50Direct labour, 3 hours at $7.75 per hour............................................................23.25Variable overhead, 3 hours at $1.50 per hour......................................................4.50Fixed overhead, 3 hours at $5 per hour..............................................................15.00Total standard cost per unit................................................................................$65.25

Manufacturing overhead is applied to production on the basis of direct labour-hours. During the year, the company worked 27,000 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 fixed overhead cost contained in the flexible budget 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?

Transcribed Image Text:

Flexible Budget Fixed Overhead Actual Fixed Applied Fixed Overhead Cost Overhead Cost Cost 2 hours x $ ? _ $148,700 Volume variance, $7,500 U Budget variance, $ ?. = $ ?