A Furniture Manufacturer Has a Standard Costing System Based on Machine

question 128

Multiple Choice

A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 3,300 \mathrm{MHs} \\\hline \text { Overhead Costs at the Denominator Activity Level: } & \\\hline \text { Variable Overhead Cost } & \$ 31,845 \\\hline \text { Fixed Overhead Cost } & \$ 40,425 \\\hline\end{array}$
The following data pertain to operations for the most recent period:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 3,400 \mathrm{MHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 3,078 \mathrm{MHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 32,980 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 38,975 \\\hline\end{array}$
-What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

• A) $1,270 favourable.
• B) $1,450 favourable.
• C) $2,675 unfavourable.
• D) $3,691 favourable.

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Definitions:

Meta-analysis

is a statistical technique that combines the results of multiple scientific studies to arrive at a comprehensive conclusion.

Interaction

Interaction refers to the reciprocal action or influence between two or more entities, objects, or individuals.

Independent Variable

The variable in an experiment that is manipulated to observe its effect on the dependent variable.

Dependent Variable

The variable in experimental research that is measured to assess any changes in response to the manipulation of the independent variable.