Raff Co Has a Standard Cost System in Which Manufacturing Overhead

question 129

Multiple Choice

Raff Co. has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs) . The following standards are based on 100,000 direct labour hours:
$\begin{array}{l|l|}\hline \text { Variable Overhead } & 2 \text { DLHs @ \$3 per DLH }=\$ 6 \text { per unit } \\\hline \text { Fixed Overhead } & 2 \text { DLHs @ \$4 per DLH }=\$ 8 \text { per unit } \\\hline\end{array}$
The following information pertains operations during March:
$\begin{array}{|l|r|}\hline \text { Units Actually Produced } & 38,000 \\\hline \text { Actual Direct Labour Hours Worked } & 80,000 \\\hline\end{array}$

$\begin{array}{|l|r|}\hline \text { Actual Manufacturing Overhead Incurred: } & \\\hline \text { Variable Overhead } & \$ 250,000 \\\hline \text { Fixed Overhead } & \$ 384,000 \\\hline\end{array}$
-For March,what was the fixed overhead volume variance?

• A) $80,000 favourable.
• B) $80,000 unfavourable.
• C) $96,000 favourable.
• D) $96,000 unfavourable.

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Definitions:

P-value

A measure in statistical hypothesis testing representing the probability of obtaining a result at least as extreme as the one observed, under the assumption that the null hypothesis is true.

Confidence Interval

A set of numbers obtained from statistical data from a sample, which is expected to encompass the value of a parameter from the overall population that is not known.

Defective

Describes an item that fails to meet quality standards or specifications, often resulting in malfunction or unsuitability for intended use.

Proportion

A part, share, or number considered in comparative relation to a whole.