The Following Information Was Taken from the Annual Manufacturing Overhead

question 128

Multiple Choice

The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. $\begin{array}{lr}\text { Variable manufacturing overhead costs } & \$ 92,400 \\\text { Fixed manufacturing overhead costs } & \$ 55,440 \\\text { Normal production level in labor hours } & 30,800 \\\text { Normal production level in units } & 5,775 \\\text { Standard labor hours per unit } & 4\end{array}$ During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $151,200.Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs.Overhead is applied on the basis of direct labor hours.Fergie's volume overhead variance is

• A)$1,680 U.
• B)$6,160 U.
• C)$7,840 U.
• D)$22,400 U.

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Definitions:

De Jure Corporation

A corporation that has fully complied with all legal requirements for incorporation and therefore enjoys all the powers and rights granted to corporations under the law.

De Facto Corporation

A company that operates as if it were legally incorporated, even though it has not completed the necessary legal formalities and documentation.

Corporation By Estoppel

Corporation by estoppel is a legal doctrine preventing someone from denying a business's corporate status when they have treated it as a corporation in previous transactions.

Novation

In a contract, the substitution of a third party for one of the original parties. The duties remain the same under the contract, but one original party is discharged and the third party takes that original party’s place.