During November, Gliem Company Allocated Overhead to Products at the Rate

question 160

Essay

During November, Gliem Company allocated overhead to products at the rate of $26.00 per direct labor hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Gliem Company operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70% of capacity is $38,900, and overhead actually incurred was $38,000. What is the company's volume variance for November? (Indicate whether the variance is favorable or unfavorable)

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Definitions:

Vested Benefits

Employee benefits (such as pension plans) that are fully entitled to the employee, not contingent on further employment.

Actuarial Assumptions

The estimates and hypotheses used by actuaries to calculate insurance risks and liabilities, including rates of mortality, morbidity, and interest.

Service Cost

The actuarial present value of benefits earned by employees during a given period, included in the calculation of pension expense.