Zero Company's Standard Factory Overhead Rate Is $3

question 11

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 was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead.

Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for Zero Company for December (to the nearest whole dollar) ?

• A) $50 favorable.
• B) $225 favorable.
• C) $425 unfavorable.
• D) $610 unfavorable.
• E) $650 unfavorable.

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Definitions:

Economic Condition

The state of a country or region in terms of the production and consumption of goods and services and the supply of money.

Expected Value

The anticipated value for a given investment in the future, taking into account both the probability and the magnitude of all possible outcomes.

Wager Amount

The sum of money staked on the outcome of a bet or gamble.

Subjective Probabilities

Probability estimates based on an individual's personal judgment or opinion rather than on objective data or specific calculations.