Buckingham Company Buckingham Company Uses a Standard Cost System for Its Production

question 198

Multiple Choice

Buckingham Company
Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units:

• A)$2,187 U
• B)$9,937 F
• C)$2,187 F
• D)$2,937 F

Standard:
DLH per unit	2.50
Variable overhead per DLH	$1.75
Fixed overhead per DLH	$3.10
Budgeted variable overhead	$21,875
Budgeted fixed overhead	$38,750

Actual:
Direct labor hours	10,000
Variable overhead	$26,250
Fixed overhead	$38,000

Refer to Buckingham Company.Using the four-variance approach,what is the variable overhead efficiency variance?

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Definitions:

Short-Run Supply Curve

A supply curve that shows the quantity of a product a firm in a purely competitive industry will offer to sell at various prices in the short run; the portion of the firm’s short-run marginal cost curve that lies above its average-variable-cost curve.

Marginal Cost Curve

A graph that shows the relationship between the marginal cost of producing an additional unit and the quantity of that unit produced.

Supply Curve

A visual chart that illustrates how the price of an item correlates with the amount of the item that sellers are prepared to offer.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good or service changes as production volume increases.