The Standard Factory Overhead Rate of Quaker Inc ? What Is the Amount of the Variable Factory Overhead

question 77

Multiple Choice

The standard factory overhead rate of Quaker Inc.is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours.The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: $$\begin{array} { l l r } \text { Standard: } & 25,000 \text { hours at } \$ 10 & \$ 250,000 \\\text { Actual: } & \text { Variable factory overhead } & 202,500 \\& \text { Fixed factory overhead } & 60,000\end{array}$$ ? What is the amount of the variable factory overhead controllable variance?

• A) $10,000 favorable
• B) $2,500 unfavorable
• C) $10,000 unfavorable
• D) $2,500 favorable

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Definitions:

Fixed Manufacturing Overhead

The total of all manufacturing costs that do not vary with the level of production, such as rent, salaries, and insurance.

Reconciliation

The process of ensuring that two sets of records or financial accounts are in agreement, often used in accounting to match transactions.

Super-Variable Costing

No real financial accounting term aligns exactly with "Super-Variable Costing"; may be a mistaken or niche term.

Variable Costing

An accounting method that considers only variable costs in determining the cost of goods sold and evaluates profitability.