The Murray Company Makes and Sells a Single Product -What Was the Fixed Overhead Budget Variance for May?
A)

question 25

Multiple Choice

The Murray Company makes and sells a single product. The company recorded the following activity and cost data for May:
$\begin{array}{l}\begin{array} { | l | r | } \hline \text { Number of Units Completed } & 45,000 \text { units } \\\hline \text { Standard Direct Labour Hours Allowed per Unit of Product } & 1.5 \text { DLHS } \\\hline \text { Budgeted Direct Labour Hours (denominator activity) } & 72,000 \text { DLHS } \\\hline \text { Actual Fixed Overhead Costs Incurred } & \$ 66,000 \\\hline \text { Volume Variance } & \$ 4,4275 \text { unfavourable } \\\hline\end{array}\\\text { The fixed portion of the predetermined overhead rate is } \$ 0.95 \text { per direct labour hour. }\end{array}$



-What was the fixed overhead budget variance for May?

• A) $2,400 favourable.
• B) $2,400 unfavourable.
• C) $6,000 favourable.
• D) $6,000 unfavourable.

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Definitions:

Flotation Costs

The expenses incurred by a company in issuing new securities, including legal, administrative, underwriting fees, and other associated costs.

Debt-Equity Ratio

An economic indicator showing the comparative mix of owner's equity and loans in funding a company's assets.

External Financing

Funds raised from outside the business, typically through borrowing or the issuance of equity.

Flotation Cost

The total costs associated with issuing new stocks or bonds, including underwriting, legal, and registration fees.