Answer the Following Questions Using the Information Below:
Sunny Company

question 300

Multiple Choice

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
$$\begin{array} { l r } \text { Direct materials } & \$ 280000 \\\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \\\text { Ind irect labour } & \$ 20000 \\\text { Plant facility rent } & \$ 60000 \\\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \\\text { Sales commissions } & \$ 40000 \\\text { Administrative expenses } & \$ 50000\end{array}$$
-_________________is a derived amount of output.

• A)Proration
• B)Equivalent units
• C)Under-allocation
• D)Over-allocation

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Definitions:

Materials Quantity Variance

The financial difference between the actual quantity of materials used in production and the standard expected quantity.

Favorable

A term used to describe outcomes or variances that are positive or beneficial to a business, such as lower costs or higher revenues than expected.

Unfavorable

A term used in budgeting and variance analysis indicating costs exceeded the budget or revenue fell short.

Variable Overhead Efficiency Variance

The difference between the expected variable overhead costs based on standard costing and the actual variable overhead incurred, attributable to efficiency.