Atkinson Landscaping
Atkinson Landscaping Applies Variable Overhead Based on Direct

question 91

Multiple Choice

Atkinson Landscaping
Atkinson Landscaping applies variable overhead based on direct labour hours. At the beginning of the current year, Atkinson had estimated the following:
$\begin{array}{lr}\text { Estimated variable overhead } & \$ 56000 \\\text { Estimated units of production } & 10000 \text { units } \\\text { Standard direct labour hours per unit } & 2.5 \text { hours }\end{array}$
During the year, 11 000 units were produced using a total of 27 200 direct labour hours and actual overhead costs were $60 000.
-Atkinson's variable overhead efficiency variance for the year was:

• A) $ 672 F
• B) $ 928 F
• C) $4000 U
• D) $ 145 U

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Definitions:

Ending Inventory

The total value of all goods available for sale at the end of an accounting period, not yet sold.

Variable Production Costs

Costs that vary directly with the level of production, such as materials, labor, and utilities needed for manufacturing.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) associated with producing a single unit of a product.