A Manufacturing Company That Has Only One Product Has Established

question 196

Multiple Choice

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company uses machine hours as its measure of activity.
$\begin{array}{|l|r|}\hline \text { Standard Hours per Unit of Output } & 8.1 \text { machine hours } \\\hline \text { Standard Variable Overhead Rate } & \$ 14.30 \text { per machine hour } \\\hline\end{array}$
The following data pertain to operations for the last month:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 1,700 \text { machine hours } \\\hline \text { Actual Total Variable Overhead Cost } & \$ 24,905 \\\hline \text { Actual Output } & 200 \text { units } \\\hline\end{array}$
-What was the variable overhead spending variance for the month?

• A) $595 favourable.
• B) $595 unfavourable.
• C) $1,739 favourable.
• D) $1,739 unfavourable.

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Definitions:

Competitive Environment

The dynamic external system in which a business competes and functions, including factors such as competitors, customers, and regulations.

Brand Loyal Customers

Refers to consumers who consistently purchase the same brand over alternatives due to satisfaction, trust, or preference.

Price Sensitivity

The extent to which price fluctuations impact the demand for a good or service.

Social Leaders

Individuals who exert influence within a community through their actions, values, and ability to mobilize others towards a common goal.