The Ferris Company Applies Manufacturing Overhead Costs to Products on the Basis

question 96

Multiple Choice

The Ferris Company applies manufacturing overhead costs to products on the basis of direct labour hours. The standard cost card shows that 3 direct labour hours are required per unit of product. For August, the company budgeted to work 90,000 direct labour hours and to incur the following total manufacturing overhead costs:
$\begin{array}{l|r|}\hline \text { Total Variable Overhead Costs } & \$ 99,000 \\\hline \text { Total Fixed Overhead Costs } & \$ 118,000 \\\hline\end{array}$
During August, the company completed 28,000 units of product, worked 86,000 direct labour hours, and incurred the following total manufacturing overhead costs:
$\begin{array}{|l|r|}\hline \text { Total Variable Overhead Costs } & \$ 98,900 \\\hline \text { Total Fixed Overhead Costs } & \$ 115,300 \\\hline\end{array}$
The denominator activity used for the predetermined overhead rate was 90,000 direct labour hours.
-For August,what was the variable overhead spending variance?

• A) $4,300 favourable.
• B) $4,300 unfavourable.
• C) $6,500 favourable.
• D) $6,500 unfavourable.

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Definitions:

Phenotypes

The observable characteristics or traits of an organism, resulting from the interaction of its genotype with the environment.

Contexts

Circumstances or conditions that surround a particular event, situation, or individual, providing background information that can affect its interpretation or understanding.

Range of Reaction

The concept that an individual's genetic makeup establishes a range for potential phenotypic outcomes, which can be influenced by the environment.

Behavior Genetics

The field of study that examines how genes and environment combine to influence the diversity of human traits, abilities, and behaviors.