8) What is the purpose of standard costing?
9) How does the planning of fixed overhead costs differ from the planning of variable overhead costs?
10) Delicious Dishes Company is developing the budgeted variable overhead cost-allocation rates for the next twelve months. DDC's operating managers select machine-hours as the cost-allocation base. Based on past performance, the operating managers estimate that it takes 0.70 machine hours per actual output unit. For 2013, the budgeted output is 167,000 dish sets, DDC budgets 60,000(0.70 × 167,000) machine hours. All of DDCs variable overhead costs are budgeted in a pool and estimated to be $1,950,000 for 2013.
Required
Compute the budgeted variable overhead cost rate per output unit.
A) $26.10 per dish set
B) $15.50 per dish set
C) $22.75 per dish set
D) $33.50 per dish set
E) $19.80 per dish set
0.70 per dish set × $32.50 per hour = $22.75 per dish set
11) Delicious Dishes Company has a fixed overhead budget of $3,600,000 in 2013, the operating managers budgeted 60,000 machine-hours for the year. A fixed overhead cost rate of $65 per machine hour and rate of 0.70 hours per actual output unit.
Required
Compute the budgeted fixed overhead cost per output unit.
A) $35 per dish set
B) $42 per dish set
C) $18 per dish set
D) $32 per dish set
E) $23 per dish set
12) Atlas Cable Company has a total variable overhead cost at $3,200,000; operational management has estimated that one actual output unit takes 0.5 machine hours. The 80,000 machine hours have been budgeted for the year 2013.
Required
Compute the budgeted variable overhead cost rate per output unit.
A) $35 per cable unit
B) $15 per cable unit
C) $20 per cable unit
D) $30 per cable unit
E) $28 per cable unit