The Following Information for the Past Year Is Available from Thinnews

question 72

Multiple Choice

The following information for the past year is available from Thinnews Co., a company that uses machine hours to apply standard factory overhead cost to outputs: $\begin{array}{lrr}\text { Actual total factory overhead cost incurred } & \$ 24,000 \\\text { Actual fixed overhead cost incurred } & \$ 10,000 \\\text { Budgeted fixed overhead cost } & \$ 11,000 \\\text { Actual machine hours } & 5,000 \\\text { Standard machine hours allowed for the units manufactured } & 4,800 \\\text { Denominator volume-machine hours } & 5,500 \\\text { Standard variable overhead rate per machine hour } & \$ 3.00\end{array}$ Under a three-variance breakdown (decomposition) of the total factory overhead variance, the fixed factory overhead production-volume variance (to the nearest whole dollar) is:

• A) $400 favorable.
• B) $600 unfavorable.
• C) $1,400 favorable.
• D) $1,400 unfavorable.
• E) $2,000 favorable.

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Definitions:

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