The Dillon Company Makes and Sells a Single Product and Uses

question 190

Multiple Choice

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March:
$\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budgeted } \\\hline \text { Units Produced } & 33,900 & 30,800 \\\hline \text { Direct Labour Hours } & 161,800 & 154,000 \\\hline \text { Variable Overhead Costs } & \$ 140,500 & \$ 123,200 \\\hline \text { Fixed Overhead Costs } & \$ 80,000 & \$ 77,000 \\\hline\end{array}$


-What was the variable overhead spending variance for March?

• A) $4,900 unfavourable.
• B) $11,060 unfavourable.
• C) $14,700 unfavourable.
• D) $17,300 unfavourable.

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Definitions:

Intervening Cause

An event or factor occurring after a party's initial act that significantly contributes to an outcome or event, potentially absolving the original actor of liability.

Proximate Causation

A principle in law that establishes the legal cause of an event based on the foreseeability of the harm and a direct relation to the injury.

Actual Causation

The fact-based determination that a defendant's action was the direct cause of the plaintiff's injury.

But-For Causation

A principle in law that determines causality by asking whether the harm would not have occurred but for the defendant's actions.