Colina Production Company Uses a Standard Costing System The Factory Overhead Rate Is Based on an Activity Level

question 107

Multiple Choice

Colina Production Company uses a standard costing system. The following information pertains to the current year. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array} { l } \text { Actual production}&5,500 units\\ \text {Actual factory overhead costs \( (\$ 16,500 \) is fixed) }&\$ 40,125 \\ \text {Actual direct labor costs ( 11,250 hours) }&\$ 131,625\\ \text {Standard direct labor for 5,500 units: }&\\ \text { Standard hours allowed}&11,000 hours\\ \text {Labor rate }&\$ 12.00\\\end{array}$


The factory overhead rate is based on an activity level of 10,000 direct labor hours.
Standard cost data for 5,000 units is as follows:

$\begin{array} { l } \text { Variable factory overhead}&\$22,500\\ \text {Fixed factory overhead }&13,500\\ \text {Total factory overhead }&\$36,000\\\end{array}$
What is the variable overhead efficiency variance for Colina Production Company?

• A)$562.50 (F)
• B)$3,000.00 (U)
• C)$1,687.50 (F)
• D)$562.50 (U)

Comprehend the importance and methods of managing receivables and the implications for cash flow.

Grasp the economic and operational considerations in extending credit to customers.

Recognize the characteristics of creditworthy customers through the five Cs of credit.

Understand the basic concepts and theories of motivation.

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Definitions:

Kinds of Validity

The extent to which a test or instrument measures what it is supposed to measure, including content, criterion, and construct validity.

Contrast Examples

The use of opposing or differing instances to illustrate a point, highlight differences, or clarify a concept.

High Validity

A measure of how accurately a test or research measures what it intends to measure.

Low Validity

Refers to the extent to which an instrument, test, or study fails to accurately measure what it is intended to measure.