Biscuit Company Has Developed the Following Standards for One of Its

question 48

Multiple Choice

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array}{ll}\text { Direct materials: } & 10 \text { pounds } \times \$ 3 \text { per pound } \\\text { Direct labor: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$
$\text { The following activity occurred during the month of June: }$
$\begin{array}{ll}\text { Materials purchased: } & 125,000 \text { pounds at } \$ 2.60 \text { per pound } \\\text { Materials used: } & 110,000 \text { pounds } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labor: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.
The variable manufacturing overhead efficiency variance is

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

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Definitions:

Inconvenience

Disturbance or bother caused by a need for extra effort or adjustment.

Explanations

Statements or accounts that make a situation, concept, or action clear and understandable to another party.

Goodwill

The intangible asset that represents the value of a business's reputation and customer relationships, influencing its competitive advantage.

Appreciation

Recognition and enjoyment of the good qualities of someone or something, often leading to expressions of gratitude.