Reference: 11-13 The Upton Company Employs a Standard Costing System in Which

question 30

Multiple Choice

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
-The materials price variance is?

• A)$420 U.
• B)$700 U.
• C)$700 F.
• D)$420 F.

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Definitions:

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe existing state or future outcomes, often affecting decision-making processes.

Budgeted Profit and Loss Statement

A financial statement forecasting the revenue, expenses, and profit for a future period, based on management's estimates.

Operating Expenses

Ongoing expenses for operating a business, excluding the cost of goods sold but including costs like rent, utilities, and payroll.

Budgetary Slack

The practice of underestimating revenues or overestimating costs when preparing a budget, to create a buffer that makes budget targets easier to achieve.