Somalian Corporation Uses a Standard Costing System The Factory Overhead Rate Is Based on a Normal Volume

question 97

Multiple Choice

Somalian Corporation uses a standard costing system. Information for the month of May is as follows: $\begin{array}{ll}\text { Actual manufacturing overhead costs }(\$ 26,000 \text { is fixed) } & \$ 80,000 \\\text { Direct labor: } & \\\text { Actual hours worked } & 12,000 \text { hrs. } \\\text { Standard hours allowed for actual production } & 10,000 \text { hrs. } \\\text { Average actual labor cost per hour } & \$ 18\end{array}$
The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows:

$\begin{array}{lr}\text { Variable factory overhead } & \$ 48,000 \\\text { Fixed factory overhead } & 24,000 \\\text { Total factory overhead } & \underline{\mathbf{\$ 72}, 000}\end{array}$ What is the variable overhead efficiency variance for Somalian?

• A)$2,000 (U)
• B)$20,000 (U)
• C)$4,000 (U)
• D)$8,000 (U)

---

Definitions:

Attracted

The action or power of evoking interest in or liking for someone or something.

Neighbors

People living or situated physically near one another; often refers to those dwelling in close proximity in a residential area.

Interpersonal Attraction

The force that draws individuals together, leading to friendships and romantic relationships, influenced by factors like physical appearance, similarity, and proximity.

Proximity

The physical or psychological closeness between people, objects, or entities, often influencing their interactions or relationships.