If Variable Manufacturing Overhead Is Applied on the Basis of Direct

question 145

Multiple Choice

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

• A) the actual variable overhead rate exceeded the standard rate.
• B) the standard variable overhead rate exceeded the actual rate.
• C) the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output.
• D) the standard direct labor-hours allowed for the actual output exceeded the actual hours.

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Definitions:

Percentage of Defects

A quality measure indicating the proportion of defective items in a production run or sample.

On-time Deliveries

The performance metric that measures the percentage of orders delivered to the customer within the agreed-upon delivery time.

Organizational Architecture

The structure of an organization. Consists of the assignment of decision rights within the organization, the methods of rewarding individuals, and the systems to evaluate the performance of both individuals and business units.

Product Redesign

The process of changing or updating a product’s features, performance, or aesthetics to meet new market demands or improve efficiency.