The Following Information Is Available from the Terry Company What Is the Fixed Overhead Production Volume Variance for Terry

question 42

Multiple Choice

The following information is available from the Terry Company: $\begin{array}{lrr}\text { Actual total factory overhead cost incurred } & \$ 25,000 \\\text { Actual fixed overhead cost incurred } & \$ 10,400 \\\text { Budgeted fixed overhead expenses } & \$ 11,000 \\\text { Actual direct labor hours (DLH) worked } & 4,400 \\\text { Standard DLHs for this period's production (output) } & 4,000 \\\text { Standard variable overhead rate per DLH } & \$ 3.00 \\\text { Standard fixed overhead rate per DLH } & \$ 2.50\end{array}$ What is the fixed overhead production volume variance for Terry Company for the period, to the nearest whole dollar?

• A) $600 favorable.
• B) $1,000 unfavorable.
• C) $1,200 unfavorable.
• D) $1,400 favorable.
• E) $1,400 unfavorable.

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Definitions:

Standard Hours (SH)

Standard Hours (SH) refer to the estimated time considered necessary to perform a task or produce a good under normal conditions, used for planning and efficiency analysis.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of those materials.

Attainable Standard

A performance measure based on achievable levels of efficiency and effectiveness under current conditions.

Perfection Standard

An idealistic benchmark for performance or quality that may be impossible to achieve but serves as a high goal.