Skillful Ltd Budgeted $900,000 for Total Overhead

question 27

Multiple Choice

Skillful Ltd budgeted $900,000 for total overhead. The standard variable overhead rate was $1 per direct labour hour, or $3 per unit, based on an anticipated activity level of 300,000 direct labour hours. During the year 110,000 units were produced. Fixed overhead costs incurred were $90,000. The variable overhead budget variance was $5,500 unfavourable, and the actual variable overhead rate was $1.10 per direct labour hour. The standard direct labour hours allowed were:

• A) 300,000
• B) 600,000
• C) 330,000
• D) 36,667

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Definitions:

Equilibrium

A state in economics where supply equals demand, leading to a stable market condition.

High Quality

Describing goods or services that meet or exceed customer expectations or standards.

Low Quality

Referring to products or services that do not meet the expected standards or preferences of consumers, often resulting in lower satisfaction.

Certified Pre-owned

A designation for used items, particularly vehicles, that have been inspected, refurbished, and certified by a manufacturer or other certifying authority, offering a warranty beyond standard used goods.