Hyteck, Inc The Fixed Overhead Production Volume Variance Was:
A) $9,000 U

question 101

Multiple Choice

Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labour hours, are derived from the master budget. $\begin{array}{lrr}&\text { Master } & \text { Actual } \\&\text { Budget } & \text { Results } \\\hline\text { Units produced } & 2,000 & 1,820 \\\text { Direct labour hours } & 10,000 & 9,200 \\\text { Fixed overhead } & \$ 100,000 & \$ 98,000 \\\text { Variable overhead } & \$ 160,000 & \$ 150,000 \\\text { Direct labour } & \$ 100,000 & \$ 90,000\end{array}$ The fixed overhead production volume variance was:

• A) $9,000 U
• B) $2,000 F
• C) $7,000 U
• D) $2,800 U

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Definitions:

Consolidation

The process of combining two or more entities into a single entity, often with the goal of improving efficiency or reducing costs.

Assets and Liabilities

The items a company owns (assets) and the debts it owes (liabilities), fundamental components of a company's financial health.

Tender Offer

An offer to purchase made by one company directly to the shareholders of another (target) company; often referred to as a “takeover bid.”

Target Company's Management

The executive and senior officers responsible for operating and making strategic decisions for a company that is being considered for acquisition or merger.