If the Standard to Produce Certain Quantity of Product Is

question 54

True/False

If the standard to produce certain quantity of product is 16,000 hours at a factory overhead rate of $5 ($3 fixed, $2 variable), actual variable factory overhead is $26,400, actual fixed factory overhead is $45,000, and 100% of productive capacity is 15,000 hours, the volume variance is $3,000 favorable.

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Definitions:

Predetermined Overhead Rate

A projected rate applied for distributing manufacturing overhead expenses across specific products or job orders.

Machine-Hours

A measure of the total time that manufacturing equipment is operating during a specific period, often used as a basis for allocating manufacturing overhead.

Unused Capacity

The available production or service capacity that is not being used, often considered when planning production schedules and resource allocation.

Period Expense

Expenses that are not directly tied to the production process and are charged to the periods in which they are incurred.