Zero Company's Standard Factory Overhead Rate Is $3

question 49

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.

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

• A) $50 favorable.
• B) $225 favorable.
• C) $425 unfavorable.
• D) $560 unfavorable.
• E) $610 unfavorable.

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Definitions:

Anxiety

A mental health condition characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.

Chronic Reaction

Persistent and ongoing response to stress or adverse conditions, potentially leading to long-term psychological or physical health issues.

Stress

The psychological and physical strain or tension experienced by individuals in response to challenging, demanding, or threatening situations.

Rationalization

The process of providing reasonable explanations for behaviors, decisions, or feelings that may otherwise seem unjustifiable.