Use the Following Information for the Next 3 Questions

question 81

Multiple Choice

Use the following information for the next 3 questions.
General Mtg. Co. budgeted fixed overhead costs of $25,000 per quarter and 1,000 units per quarter in its normal absorption costing system. Any volume variance is carried forward and closed at year end. The company experienced the following activity:
-The volume variance in quarter 1 was

• A) $2,500 Unfavorable
• B) $10,000 Unfavorable
• C) $7,500 Favorable
• D) $5,000 Favorable

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Definitions:

Accrued Interest

Accrued Interest is the interest that has accumulated on a debt or investment over a specific period but has not yet been paid.

Journal Entry

A record in accounting that logs every financial transaction of a business in double-entry bookkeeping.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, typically presented as a line item on the income statement.

Fixed Expense

Fixed expense refers to costs that do not fluctuate with the level of goods or services produced by the business, such as rent, salaries, and insurance.