Litchfield Industries Gathered the Following Information for the Month Ended

question 33

Multiple Choice

Litchfield Industries gathered the following information for the month ended June 30:
The static budget volume is 5,500 units:
Overhead flexible budget:

Actual production was 12,000 units.Actual overhead costs were $28,000 for variable costs and $37,000 for fixed costs.Actual machine hours worked were 16,000 hours.
What is the fixed overhead volume variance? (Assume the allocation base for fixed overhead costs is machine hours. )

• A)$42,250 unfavorable
• B)$42,250 favorable
• C)$36,400 unfavorable
• D)$36,400 favorable

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Definitions:

Specific Performance

A court-ordered mandate requiring a party to fulfill their obligations under a contract, typically used when monetary damages are insufficient.

Frustrated

In legal terms, refers to a contract that cannot be fulfilled due to unforeseen circumstances, rendering the obligations impractical or impossible to perform.

Condition Precedent

A condition under which the obligations of a contract will begin; also called “subject-to” clause.

Frustration

Interference with a contract by some outside, unforeseen event that makes performance impossible or essentially different in nature.