The Following Information Is Available for the Danske Company Danske Company Had Total Underapplied Overhead of $15,000

question 107

Multiple Choice

The following information is available for the Danske Company:
$\begin{array}{lrr} \text { Denominator hours for May } &15,000\\ \text {Actual hours worked during May } &14,000\\ \text {Standard hours allowed for May } &12,000\\ \text {Flexible budget fixed overhead cost } &\$45,000\\\text { Actual fixed overhead costs for May } &\$48,000\\\end{array}$


Danske Company had total underapplied overhead of $15,000. Additional information is as follows:
$\begin{array}{c}\begin{array}{lll} \text {Variable Overhead:}\\ \text {Applied based on standard direct labor hours allowed }\\\text { Budgeted based on standard direct labor hours}\\\\ \text {Fixed Overhead:}\\ \text {Applied based on standard direct labor hours allowed }\\ \text {Budgeted based on standard direct labor hours}\end{array}\begin{array}{lll}\\\$42,000\\38,000\\\\\\\$30,000\\27,000\end{array}\end{array}$



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What is the fixed overhead price (spending) variance for May?

• A) $1,000 unfavorable.
• B) $3,000 unfavorable.
• C) $2,000 unfavorable.
• D) $2,000 favorable.

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Definitions:

Normal Range

The set of values within which a normal function or phenomenon occurs; often used in a medical context.

Gifted

Possession of above-average intelligence (an IQ of 130 or higher) and/or superior talent for something.

Stanford-Binet

A standardized test that assesses intelligence and cognitive abilities in children and adults, based on the original work by Binet and later refined at Stanford University.

Adolescence

The developmental period of transition from childhood to early adulthood, entered at approximately 10 to 12 years of age and ending at 18 or 19 years of age.