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:

Activity-Based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Internal Decision-Making

The process within an organization to choose among alternatives and make choices that impact its internal operations and strategy.

Duration Driver

A measure of the amount of time required to perform an activity.

Manufacturing Overhead Cost

All indirect costs associated with the production process, including but not limited to utilities, maintenance, and factory equipment depreciation.