Zero Company's Standard Factory Overhead Rate Is $3

question 14

Multiple Choice

Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH) , calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost incurred was $3,800 for 840 actual DLHs, of which $1,300 was fixed factory overhead.

What is the fixed overhead production volume variance, to the nearest whole dollar, for Zero Company in December?

• A) $0.
• B) $150 unfavorable.
• C) $225 favorable.
• D) $425 unfavorable.
• E) $650 unfavorable.

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Definitions:

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, project, or business activity.

Syndicate

A group of individuals or organizations combined to promote a common interest.

Contracts Fraud

Contracts fraud involves the intentional deception or misrepresentation made by a party in a contract to gain a financial advantage or to harm the other party, often relating to the falsification or concealment of information.

Business Organization

The structure and framework within which an enterprise operates, detailing the roles, relationships, and responsibilities of its entities.