Hype Production Company Uses a Standard Costing System The Factory Overhead Rate Is Based on an Activity Level

question 14

Multiple Choice

Hype Production Company uses a standard costing system.The following information pertains to the current year: $\begin{array}{lr}\text { Actual factory overhead costs }(\$ 16,500 \text { is }&\$40,125\\\text { fixed) }\\\text { Actual direct labour costs }(11,250 \text { hours }) &\$131,625\\\text { Standard direct labour for } 5,500 \text { units: }\\\text { Standard hours allowed }&11,000\text { hours } \\\text { Labour rate }&\$12.00\end{array}$
The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units are as follows: $\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & 13,500 \\\text { Total factory overhead } & \$ 36,000 \\\end{array}$ What is the fixed overhead volume variance for Hype Production Company?

• A) $1,350 (U)
• B) $1,350 (F)
• C) $3,600 (F)
• D) $4,125 (U)

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