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

question 9

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 fixed factory overhead spending variance (to the nearest whole dollar) in December for Gerhan Company?

• A) $0.
• B) $180 unfavorable.
• C) $300 favorable.
• D) $480 unfavorable.
• E) $680 unfavorable.

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Definitions:

Benchmarking HR Activities

The practice of comparing an organization's HR processes and performance metrics to industry standards or best practices to identify areas of improvement.

Management-By-Objectives

A strategic management model focusing on setting and achieving specific objectives within an organization.

Efficiency

The ability to accomplish a job with a minimum expenditure of time and effort.

Resource Inputs

The materials, capital, energy, information, and human skills required to produce goods or services.