Use the Following Information for the Next 3 Questions

question 31

Multiple Choice

Use the following information for the next 3 questions.
Anacortes, Inc. uses a standard cost system. At the beginning of the year, it budgeted $50,000 for fixed overhead. The estimated variable overhead allocation rate was $3.30 per machine hour, and machine hours is the cost allocation base for both variable and fixed overhead. The static budget was based on 16,000 units of production and sales, and each unit was expected to use 2.5 machine hours. Actual total overhead was $170,000, and Anacortes produced and sold 15,000 units during the year. Actual machine hours for the year were 36,000.
-The variable overhead efficiency variance was

• A) $4,950 favorable
• B) $3,750 favorable
• C) $1,200 unfavorable
• D) $3,125 unfavorable

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Definitions:

No-Par Common Stock

Equity securities issued without a par value, where the board of directors determines the issuing price.

Par Preferred Stock

Preferred shares of a company's stock issued at a specific nominal value and with fixed dividend payments.

Cash

Liquid funds available for transaction or investment purposes.

Treasury Stock

Shares that were issued and later reacquired by the issuing corporation, which do not confer voting rights or pay dividends.