Gerhan Company's Flexible Budget for the Units Manufactured in May

question 122

Multiple Choice

Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH) , based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead.

What is the total factory overhead flexible-budget variance (to the nearest whole dollar) for Gerhan Company in May?

• A) $380 unfavorable.
• B) $680 unfavorable.
• C) $860 unfavorable.
• D) $1,160 unfavorable.
• E) $1,360 unfavorable.

---

Definitions:

Organizational Needs Analysis

A systematic approach to identifying and addressing gaps between current organizational capabilities and desired outcomes.

Objectives

Specific, measurable targets set by an organization or individual to achieve within a particular timeframe.

Goals

Specific achievements or objectives that an individual, group, or organization aims to reach through targeted efforts.

Proximal Goals

Short-term objectives or milestones that are set as steps toward achieving a larger, long-term goal.