Cabot Company Collected the Following Data Regarding Production of One

question 165

Multiple Choice

Cabot Company collected the following data regarding production of one of its products.Compute the variable overhead spending variance.

• A)$18,300 favorable.
• B)$18,000 favorable.
• C)$18,000 unfavorable.
• D)$18,300 unfavorable.
• E)$14,300 unfavorable.

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Definitions:

Equivalent Units of Production

An accounting term used to denote the amount of finished goods produced by a company in a given period, after adjusting for work-in-progress inventory at the beginning and end of that period.

Materials Preparation Department

A division within a company responsible for preparing raw materials for production.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average of all units available for sale during the period.

Equivalent Units of Production

A concept used in cost accounting to standardize the quantity of output by converting unfinished products into their equivalent of finished goods.