The Dillon Company Makes and Sells a Single Product and Uses

question 33

Multiple Choice

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March:
$\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budgeted } \\\hline \text { Units Produced } & 33,900 & 30,800 \\\hline \text { Direct Labour Hours } & 161,800 & 154,000 \\\hline \text { Variable Overhead Costs } & \$ 140,500 & \$ 123,200 \\\hline \text { Fixed Overhead Costs } & \$ 80,000 & \$ 77,000 \\\hline\end{array}$


-What was the fixed overhead volume variance for March?

• A) $1,550 favourable.
• B) $3,900 unfavourable.
• C) $7,750 favourable.
• D) $7,750 unfavourable.

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Definitions:

Book Value Per Share

A financial measure that represents a per share assessment of the minimum value of a company's equity.

Equipment On Credit

The acquisition of machinery or equipment for business operations where payment is made through financing or on a deferred payment plan instead of upfront cash.

Debt-To-Equity Ratio

A measure used to evaluate a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.

Long-Term Debt

Financial obligations of a company that are due more than one year in the future, often in the form of loans or bonds.