Fletcher Company Collected the Following Data Regarding Production of One

question 45

Multiple Choice

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead cost variance. $\begin{array}{lll}\text { Direct labor stendard (2 hrs. @ } \$ 12.75 / \mathrm{hr} \text {.) } & \$ 5.50 &\text {per finished unit}\\\text { Actual direct labor hours } & 81,500&\text { hrs}\\\text { Budgeted units } & 42,000&\text {units}\\\text {Actual finished units produced}&40,000&\text {units}\\\text {Standad variable OH rate (2 hrs. @ \$14.30/hr) }&\$28.60&\text {per finished unit}\\\text {Standard fixed OH rate \( (\$ 336,000 / 42,000 \) units) }&\$8.00 &\text {per unit}\\\text {Actual cost of variable overhead costs incurred}&\$1,140,000\end{array}$ Actual cost of fixed overhead costs incurred $ 338,000

• A) $18,000 unfavorable.
• B) $18,300 favorable.
• C) $14,300 unfavorable.
• D) $4,000 favorable.
• E) $18,000 favorable.

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Definitions:

Equally Likely

A term used in probability to denote outcomes that have the same chance of occurring.

Continuous Probability Distributions

Mathematical functions that represent the probabilities of all possible continuous outcomes for a random variable.

Bernoulli Distribution

A probability distribution of a random variable that takes the value 1 with probability 'p' and the value 0 with probability '1-p'.

Pareto Distribution

A probability distribution used to describe phenomena in the natural and social sciences where a small proportion of occurrences leads to a large proportion of outcomes.