Alumni Manufacturing Company Has the Following Information Pertaining to a Normal

question 56

Multiple Choice

Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units: Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are:
$\begin{array} { l l l } \text { Fixed } & \$ 6.00 & \\ \text { Variable } & 10.00 & \$ 16.00 \\\\\text { Units actually produced in current month } & 9,000 \text { units } \\\text { Actual factory overhead costs incurred } & \\\text { (includes } \$ 70,000 \text { fixed) } & \$ 156,000 \\\text { Actual direct labor hours } & 9,000 \text { hours }\end{array}$

What is the fixed overhead spending variance for Alumni?

• A)$10,000 (U)
• B)$6,000 (U)
• C)$4,000 (F)
• D)$-0-

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Definitions:

Principal-Agent Problem

A dilemma in economics and organizational theory where one party (the agent) is expected to act in the best interest of another (the principal) but may have personal interests that conflict.

Corporate Managers

Individuals at high levels within a corporation who are responsible for making strategic decisions and ensuring the company's objectives are met.

Corporate Owners

Individuals or entities that legally possess shares of stock in a corporation, granting them ownership stakes in the company.

Individual Accountability

The principle that each person is responsible for their own actions and may be required to explain them when necessary.