Bluecap Co During 2019, Bluecap Worked 28,000 DLHs and Manufactured 9,600 Units

question 154

Multiple Choice

Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: $\begin{array}{lrr}\text { Denominator volume-number of units }&8,000\\\text { Denominator volume-percent of capacity }&80\%\\\text { Denominator volume-standard direct labor hours (DLHs) } & 24,000 \\\text { Budgeted variable factory overhead cost at denominator volume } & \$103,200 \\\text { Total standard factory overhead rate per DLH } &\$ 15.10\end{array}$ During 2019, Bluecap worked 28,000 DLHs and manufactured 9,600 units. The actual factory overhead cost for the year was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2020 Bluecap decided to raise the level of operation to 90% of capacity (a level it considers to be "practical capacity") , to manufacture 9,000 units at a budgeted total of 27,000 DLHs.
The variable overhead spending variance in 2019 for Bluecap Co. (to the nearest whole dollar) was:

• A) $6,000 unfavorable.
• B) $8,000 unfavorable.
• C) $9,200 favorable.
• D) $11,440 unfavorable.
• E) $17,440 unfavorable.

---

Definitions:

Real GDP

Real GDP refers to the economic output of a country adjusted for price changes, such as inflation or deflation, providing a more accurate measure of economic performance over time.

Nominal Interest Rate

The proportionate rise in funds that the borrower repays to the lender, without considering inflation adjustments.

Money Demand

The desire to hold cash or easily liquidable assets instead of investing or consuming, influenced by interest rates and economic conditions.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.