Litchfield Industries Gathered the Following Information for the Month Ended

question 65

Multiple Choice

Litchfield Industries gathered the following information for the month ended June 31: The static budget volume is 5,500 units:
Overhead flexible budget:
Actual production was 12,000 units. Actual overhead costs were $28,000 for variable costs and $37,000 for fixed costs. Actual machine hours worked were 16,000 hours.
What is the fixed overhead volume variance? (Assume the allocation base for fixed overhead costs is machine hours.)

• A)$42,250 unfavorable
• B)$42,250 favorable
• C)$36,400 unfavorable
• D)$36,400 favorable

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Definitions:

Acquisition

The act of gaining control over another company or business entity by buying it or merging with it.

Weighted Average Cost

A method of calculating the cost of goods available for sale that considers the cost of goods at varying times and at different purchase costs.

Computation

The process of performing mathematical calculations or processing information to achieve a result.

Debt-equity Ratio

A metric that evaluates the financial leverage of a company, determined by dividing the total amount of its liabilities by its shareholder equity.