Nora,IncManufactures Components Used by a Major Cell Phone Manufacturer

question 86

Multiple Choice

Nora,Inc.manufactures components used by a major cell phone manufacturer.During the year,Nora produced 160,000 components and used 40,500 direct labor hours.Nora based its current year budget on a production level of 150,000 components each of which requires 15 minutes of direct labor time.Total budgeted variable overhead for the year was $131,250.Actual variable overhead for the year was $145,800.What is Nora's flexible budget variable overhead variance?

• A) $14,550 favorable
• B) $14,550 unfavorable
• C) $4,050 unfavorable
• D) $4,050 favorable

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Definitions:

Opportunity Costs

The value of the next best alternative foregone as the result of making a decision.

Explicit Cost

The direct, out-of-pocket payment made by businesses for the use of resources.

Graphic Artist

A professional who creates visual content to communicate messages through digital and printed mediums.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, measuring the true profitability of an enterprise.