The Standard Variable Overhead Cost Rate for the Gordon Company

question 157

Multiple Choice

The standard variable overhead cost rate for the Gordon Company is $13.25 per unit. Budgeted fixed overhead cost is $80,000. The company budgeted 8000 units for the current period and actually produced 4100 finished units. What is the fixed overhead volume variance? Assume the allocation base for fixed overhead costs is the number of units expected to be produced.

• A)$39,000 favorable
• B)$25,675 unfavorable
• C)$25,675 favorable
• D)$39,000 unfavorable

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Definitions:

Sales Returns and Allowances

A reduction in sales revenue due to returns or allowances for unsatisfactory goods, reported as a contra-revenue account.

Debit Memorandum

A document issued to signal a decrease in accounts receivable, often due to a return or an adjustment.

Accounts Payable

Liabilities or amounts a company owes to creditors or suppliers for goods or services that have been received but not yet paid for.

Sales Discount

A reduction from the listed or invoice price offered by a seller to a buyer, often to prompt early payment or reward bulk purchases.