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

question 89

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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Is the production volume variance favorable or unfavorable?

• A) Favorable.
• B) Unfavorable.