Henley Company Uses a Standard Cost System in Which It

question 46

Multiple Choice

Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labour-hours.For the month of January,the fixed manufacturing overhead volume variance was $2,220 favourable.The company uses a fixed manufacturing overhead rate of $1.85 per direct labour-hour.During January,the standard direct labour-hours allowed for the month's output:

• A) exceeded denominator hours by 1,000.
• B) fell short of denominator hours by 1,000.
• C) exceeded denominator hours by 1,200.
• D) fell short of denominator hours by 1,200.

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Definitions:

Gain-Sharing Plans

A type of incentive plan where employees receive benefits from cost-savings or productivity improvements they contribute to, enhancing teamwork and efficiency.

Long-Term Profitability

The ability of an organization to generate consistent profits over an extended period, indicating its financial health and sustainability.

Performance Based Pay

A compensation strategy that ties employee pay directly to their performance and achievements, varying with the individual's or team's achievements.

Organization Value

The core principles and beliefs that guide an organization's decisions and behavior, influencing its culture and identity.