Rumington Popcorn Uses a Standard Cost System and Applies Overhead

question 47

Multiple Choice

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis.The company estimated that 30,000 units would be produced in 2017 and uses this quantity to establish its standard overhead cost per unit.The cost formula for overhead costs used to develop the standard overhead cost per unit was:
Overhead = $120,000 + $6 per unit
During the year, actual overhead cost was $340,000.Actual units produced were 32,000.How much is the overhead volume variance for 2017?

• A)$2,000 favorable
• B)$28,000 unfavorable
• C)$8,000 favorable
• D)$28,000 favorable

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Definitions:

Average Total Cost

The per-unit cost of production, calculated by dividing the total cost by the total quantity of output produced.

Traditional Format

Generally refers to a conventional or long-established way of formatting or presenting data, documents, or accounting reports.

Selling Expenses

Costs incurred to sell products, including advertising, sales commissions, and promotional materials, that are not directly associated with the production of goods.

Administrative Expenses

Costs related to the general operations of a company, such as salaries of non-production staff, office supplies, and utilities.