Megan, Inc

question 86

Multiple Choice

Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor (2.0 hrs. @ $5.00/hr.) = $10.00; overhead (2.0 hrs. @ $2.50/hr.) = $5.00. The flexible budget for overhead is $120,000 plus $1.00 per direct labor hour (DLH) . Actual data for the past month show total overhead costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units produced.

The variable factory overhead efficiency variance for Megan, Inc. for the past month, to the nearest whole dollar, was:

• A) $0.
• B) $3,000 unfavorable.
• C) $5,000 unfavorable.
• D) $17,000 unfavorable.
• E) $25,000 unfavorable.

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Definitions:

Pro Forma Financial Statements

Financial statements that project the future financial position of a company based on current data and assumptions about future events.

Worst-Case Scenarios

The most adverse, yet possible, outcomes that can occur under certain conditions.

Competitor Behavior

Actions and strategies employed by businesses in the same industry that influence market dynamics and competitive landscapes.

Accrual Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.