Miguez Corporation Makes a Product with the Following Standard Costs

question 151

Multiple Choice

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 3,300 units in September, but actual production was 3,200 units. The company used 6,140 liters of direct material and 1,750 direct labor-hours to produce this output. The company purchased 6,500 liters of the direct material at $7.90 per liter. The actual direct labor rate was $31.10 per hour and the actual variable overhead rate was $2.60 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 rate variance for September is:

• A) $128 Favorable
• B) $175 Unfavorable
• C) $175 Favorable
• D) $128 Unfavorable

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for financing payroll, accounts payable, and inventories.

Simple Interest

Interest that is computed solely on the initial sum invested or loaned, not taking into account any accumulated interest from previous periods.

Face Value

The nominal or dollar value printed on a security or financial instrument, representing its value upon maturity or redemption.

Treasury Bill

A short-term government security issued at a discount from the face value and yielding the face value upon maturity.