Irving Corporation Makes a Product with the Following Standards for Direct

question 234

Multiple Choice

Irving Corporation makes a product with the following standards for direct labor and variable overhead: In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.
The variable overhead rate variance for November is:

• A) $612 U
• B) $660 U
• C) $660 F
• D) $612 F

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, where the investment gives the investor significant influence over the investee.

Intra-entity Purchases

Buying and selling of goods or services between departments or divisions within the same company.

Gross Profit Rate

The ratio of gross profit to net sales, indicating the efficiency of a company in managing its production and labor costs.

Intra-entity Transfer

A transaction occurring between divisions or units within the same legal entity.