Jewel Company Calculates Its Predetermined Rates Using Practical Volume, Which

question 20

Multiple Choice

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
$\begin{array}{ll}\text { Units produced: } & 280,000 \\\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \\\text { Variable overhead: } & \$ 2,320,000 \\\text { Fixed overhead: } & \$ 872,000\end{array}$
-Refer to the Figure.What is the fixed overhead volume variance?

• A)$8,000 U
• B)$24,000 U
• C)$28,000 F
• D)$32,000 F

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Definitions:

Current Liabilities

Current liabilities are a company's debts or obligations that are due to be paid to creditors within one year.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations, calculated as earnings before interest and taxes divided by interest expense.

Debt-to-Assets Ratio

Debt-to-Assets Ratio is a financial ratio indicating the proportion of a company's assets that are financed through debt, used as a measure of financial leverage.