(Appendix 10A) Rainbolt Incorporated Makes a Single Product--An Electrical Motor

question 25

Multiple Choice

(Appendix 10A) Rainbolt Incorporated makes a single product--an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

-The fixed overhead volume variance is:

• A) $400 F
• B) $19,600 F
• C) $400 U
• D) $19,600 U

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Definitions:

Variable Administrative Expenses

Costs related to the administration of a business that vary with the level of activity or production.

Fixed Cost

Charges that are stable in spite of the levels of output or sales achieved, such as housing lease, salaries paid to employees, and insurance expenses.

Production Supplies

Items and materials used in the manufacturing process that are not directly incorporated into the final product.

Mainframe Computer

A large, powerful computer primarily used by large organizations for bulk data processing, such as census, industry and consumer statistics, and financial transaction processing.