Channel One Industries Uses a Standard Costing System to Apply

question 62

Multiple Choice

Channel One Industries uses a standard costing system to apply manufacturing costs to its production process.In May,Channel One anticipated producing 2,450 units with fixed manufacturing overhead costs allocated at $7.40 per direct labor hour with a standard of 1.5 direct labor hours per unit.In May,actual production was 3,200 units and actual fixed manufacturing overhead costs were $23,000.
What was Channel One's fixed manufacturing overhead volume variance in May?

• A)$4,195 favorable
• B)$4,195 unfavorable
• C)$8,325 favorable
• D)$8,325 unfavorable

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Definitions:

Effective-Interest Amortization

A method of amortizing a bond discount or bond premium that reflects the effective interest rate a company pays bondholders over the life of a bond.

Coupon Interest Rate

The annual interest rate paid by a bond expressed as a percentage of its face value.

Present Value Factor

A factor used to calculate the present value of a sum to be received in the future, considering a specific interest rate over a certain period.

Premium Amortization

The gradual reduction of the premium paid above the face value of a bond, allocated over the bond's life until maturity.