Zero Company's Standard Factory Overhead Rate Is $3

question 14

Multiple Choice

Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH) , calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost incurred was $3,800 for 840 actual DLHs, of which $1,300 was fixed factory overhead.

What is the fixed overhead production volume variance, to the nearest whole dollar, for Zero Company in December?

• A) $0.
• B) $150 unfavorable.
• C) $225 favorable.
• D) $425 unfavorable.
• E) $650 unfavorable.

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Definitions:

Management

The process of planning, organizing, directing, and controlling resources effectively to achieve desired objectives.

Growth

The process of increasing in size, magnitude, or complexity, often used in reference to personal development, economic expansion, or biological increase.

Competence Stage

A phase in skill acquisition where individuals have gained enough knowledge and ability to perform certain tasks reliably, but not yet effortlessly.

Complacency

A feeling of smug or uncritical satisfaction with oneself or one’s achievements, often leading to a lack of effort or creativity.