The Predetermined Overhead Rate for Zane Company Is $5 Comprised

question 175

Multiple Choice

The predetermined overhead rate for Zane Company is $5 comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150000 was divided by normal capacity of 30000 direct labor hours to arrive at the predetermined overhead rate of $5. Actual overhead for June was $8900 variable and $5400 fixed and 1500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is

• A) $1800 F.
• B) $700 F.
• C) $700 U.
• D) $1800 U.

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Definitions:

Unlimited Liability

A legal obligation in business where owners are personally responsible for all debts of the business, extending to their personal assets.

Limited Liability

A legal structure that protects business owners' personal assets from company debts and liabilities.