Miguez Corporation Makes a Product with the Following Standard Costs

question 51

Multiple Choice

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 per hour.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The variable overhead efficiency variance for September is:

• A) $140 Unfavorable
• B) $140 Favorable
• C) $133 Favorable
• D) $133 Unfavorable

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Definitions:

Commercial Lease

A legally binding contract used when renting business property to or from another individual or company.

Lessor

The owner of a property or asset who leases it out to another party, known as the lessee, under a rental agreement.

Involuntary Bailment

A situation where an individual unintentionally comes into possession of someone else's property and has a legal duty to take care of it.

Bailor

The owner giving up possession of property in a bailment.