Priority Company, Which Applies Overhead to Production on the Basis

question 31

Multiple Choice

Priority Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 9,000
Actual variable overhead incurred: $54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: $3.50
If Priority estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:

• A) $1,600 favorable.
• B) $1,600 unfavorable.
• C) $7,000 favorable.
• D) $7,000 unfavorable.
• E) None of the answers is correct.

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Definitions:

Fixed Period

A set length of time during which certain activities or events are scheduled to occur or conditions are meant to remain unchanged.

Expected Value

The anticipated value or mean of a random variable, representing the center of its distribution.

Portfolio

A selection of monetary assets, covering equities, fixed-income securities, commodity holdings, liquid assets, and assets nearing cash, containing mutual funds and Exchange-Traded Funds.

Stocks

Shares representing ownership interests in corporations, allowing investors to claim on businesses' assets and earnings.