The Following Information for the Past Year Is Available from Thinnews

question 146

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 two-variance breakdown (decomposition) of the total factory overhead variance, the fixed 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:

CCA Class

In the context of Canadian taxation, refers to the categorization of depreciable property for the purpose of calculating capital cost allowance (tax deductions for depreciation).

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and factory overhead.

Tax Rate

The rate at which income is taxed for a person or business entity.

Net Income

Net income refers to the total profit of a company after all expenses and taxes have been subtracted from total revenue.