Reference no: EM132549244

The flexible budget of Decibar Company is summarized below:

Percent of normal operating operating capacity                 80%             90%             100%              110%
Variable overhead                                                    P21,000           P23,000           P25,000          P27,000
Fixed overhead                                                        50,000             50,0000             50,000             50,000
Total Factory Overhead                                        P71,000                  P73,000              P75,000         P77,000

Question 1: 100 units of product are produced when the company operate at its normal capacity. The standard labor time per unit is 15 minutes. Actual production for the year was 90,000 units of product in 44,000 hours. What is the standard variable factory overhead rate per hour?

a. 1.00

b. 1.25

c. 4.00

d. 5.00

Question 2: Using the data, what is the budgetary factory overhead adjusted to standard hours?

a. 22,500

b. 50,000

c. 72,500

d. 75,000

Question 3: Setting standards

a. Has important behavioral applications

b. Is largely a matter of calculating rates and quantities

c. Should be done to make them as tight as possible

d. Is done only for manufacturing activities

Question 4: A labor spending variance with a credit balance indicates that:

a. The wage rate paid to production workers was below the standard.

b. The wage rate paid to production workers was above the standard.

c. Less time was spent on production than was called for by the standard.

d. More time was spent on production than was called for by the standard.