Rodarta Corporation Applies Manufacturing Overhead to Products on the Basis

question 16

Multiple Choice

Rodarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours.In the most recent month,the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6,480 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?

• A) $240 Favorable
• B) $144 Unfavorable
• C) $240 Unfavorable
• D) $96 Favorable

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Definitions:

Inflation Rate

The percent change in the price level of goods and services in an economy over a period of time, typically measured annually.

PPI

Producer Price Index, a measure of the average change over time in the selling prices received by domestic producers for their output.

Basket of Goods

A set of products or commodities compiled for the purpose of monitoring price changes in the market over time.

Nominal Interest Rate

The stated interest rate on a loan or financial product, not adjusted for inflation, reflecting the actual rate charged or paid.