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27 September, 13:43

A company uses a standard costing system. The production budget for year 1 was based on 200,000 units of output. Each unit requires two standard hours of manufacturing labor for completion. Total overhead was budgeted at $900,000 for the year, and the budgeted fixed overhead rate was $1.50 per direct manufacturing labor hour. Both variable and fixed overheads are allocated to the product based on direct manufacturing labor hours. The actual data for year 1 are as follows:

Actual production: 198,000 units

Actudal direct labor hours 440,000 direct labor hours

Actual variable manufacturing overhead $352,000

Actual fixed manufacturing overhead $575,000

The standard hours allowed for actual production for the year total:

A.

247,500

B.

396,000

C.

400,000

D.

495,000

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Answers (1)
  1. 27 September, 16:39
    0
    B. 396,000

    Explanation:

    The formula to compute the standard hours allowed for would be

    = Standard hours per unit of of manufacturing labor * Actual production

    = 2 hours per unit * 198,000 units

    = 396,000 hours

    Simply we multiplied the standard hours per unit with the actual production so that the standard hours allowed could find out

    All other information which is given is not relevant. Hence, ignored it
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