Question

Edelweiss Company uses a standard costing system and applies its fixed manufacturing overhead (FMOH) costs to products based on the number of labor hours. Some data for last year are given below. The FMOH was over- applied by $2,000.Actual FMOH costs $48,000Actual production 5,000 unitsVolume variance $4,000 favorableDetermine the budgeted production level in units for the past year.A. 5,000 unitsB. 4,800 unitsC. 4,792 unitsD. 4,600 unitsE. Need more information

Answer 1

D. 4,600 units

Step-by-step explanation:

The computation of the budgeted production level in units for the pas is shown below:

Budgeted production level in units = Budgeted units cost ÷ FMOH per unit

where,

Budgeted units cost is

= $48,000 + $2,000 - $4,000

= $46,000

And, FMOH per unit is

= ($48,000 + $2,000) ÷ (5,000 units)

= $10

So, the budgeted units is

= $46,000 ÷ $10

= $4,600