An Outdoor Barbecue Grill Manufacturer Has a Standard Costing System

question 89

Multiple Choice

An outdoor barbecue grill manufacturer has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 3,300 \text { DLHs } \\\hline \text { Fixed Overhead Cost } & \$ 26,895 \\\hline\end{array}$
The following data pertain to operations for the most recent period:
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 3,400 \mathrm{DLHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 3,420 \mathrm{DLHs} \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 28,295 \\\hline\end{array}$
-What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

• A) $166 unfavourable.
• B) $422 favourable.
• C) $585 favourable.
• D) $1,400 unfavourable.

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Definitions:

Demand

The volume of goods or services that individuals are prepared and financially able to acquire at varying price points during a certain time span.

Perfectly Competitive Labor Market

A theoretical market where numerous employers and employees interact, with no single entity able to influence wages or working conditions.

Wages

The compensation received by employees for their labor, typically expressed as an hourly rate or annual salary.

Labor

Labor refers to the human effort, both physical and mental, used in the production of goods and services.