Burkett Company Uses a Standard Cost System The Fixed Overhead Production Volume Variance Was:
A) $15,000 F

question 112

Multiple Choice

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labour hour. The overhead rate is based on 10,000 hours. Actual results were: $$\begin{array} { l r r } \text { Standard direct labour hours } & 9,000 \\\text { Actual direct labour hours } & 10,000 \\\text { Fixed overhead } & \$ 190,000 & \\\text { Variable overhead } & \$ 185,000\end{array}$$ The fixed overhead production volume variance was:

• A) $15,000 F
• B) $20,000 U
• C) $10,000 F
• D) $10,000 U

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Definitions:

Investment Center

A segment or division within a company for which direct responsibility is given to a manager, who is judged by the profitability and the return on investment of the division.

Flexible Budgets

Flexible budgets are financial plans that can vary depending on actual levels of output, activity, or revenue, allowing businesses to adjust their spending and resources more dynamically.

Fixed Budgets

Financial plans that do not change over the budget period, regardless of changes in business activity.

Cost Variance

The difference between the budgeted or planned costs and the actual costs incurred.