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PAST EXAM QUESTION # 2 : Fun Unlimited Corp. produces a toy called the Challenge. Overhead is applied to products on the basis of direct
PAST EXAM QUESTION #:
Fun Unlimited Corp. produces a toy called the Challenge. Overhead is applied to products on the basis of
direct labourhours. The company recently implemented a standard costing system to help control costs and
has established the following standards for the Challenge toys:
Direct materials: microns per toy at $ per micron
Direct labour: hours per toy at $ per hour
Variable manufacturing overhead: hours per toy at $ per hour
Fixed manufacturing overhead: hours per toy at $ per hour
During July, the company produced Challenge toys. The fixed overhead expense budget for July was
$ with direct labourhours as the denominator level of activity. Production data for the month on
the toys follow:
Direct materials: microns were purchased at a cost of $ per micron; of these microns were
still in inventory at the end of the month.
Direct labour: direct labourhours were worked, at a cost of $
Variable overhead: Actual cost in July was $
Fixed overhead: Actual cost in July was $
Required:
Compute the materials, labour, variable manufacturing overhead, and fixed manufacturing overhead
variances.
Calculate total overapplied or underapplied overhead for July.
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