Zero Company's Standard Factory Overhead Rate Is $3

question 98

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.

Assuming a four-variance breakdown (decomposition) of the total overhead variance, what is the fixed factory overhead efficiency variance (to the nearest whole dollar) for the period?

• A) N/A—this variance does not exist.
• B) $225 favorable.
• C) $425 unfavorable.
• D) $650 unfavorable.

---

Definitions:

Cotton Production

The cultivation and harvesting of cotton plants, primarily for the textile industry, historically a major driver of the economy, especially in the American South.

Egypt

A country in North Africa, known for its ancient civilization and notable landmarks like the Pyramids and the Great Sphinx of Giza.

India

A country in South Asia, known for its diverse culture, deep historical roots, and as the world's largest democracy.

Slave Economies

were economic systems that relied heavily on slave labor, particularly prevalent in the Americas before the abolition of slavery.