The Standard Variable Overhead Cost Rate for Walter Manufacturing Is

question 3

Multiple Choice

The standard variable overhead cost rate for Walter Manufacturing is $23 per unit. Budgeted fixed overhead cost is $52,000. Walter Manufacturing budgeted 4,000 units for the current period and actually produced 4,100 finished units. What is the production volume variance, assuming that the allocation base for fixed overhead costs is the number of units expected to be produced?

• A) $2,300 favourable
• B) $1,300 favourable
• C) $2,300 unfavourable
• D) $1,300 unfavourable

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Definitions:

Employment

The condition of having paid work or being engaged in a productive activity.

Marginal Revenue Product

The additional income produced by one more unit of input, such as labor or capital, in the production process.

Variable Input

An input whose quantity can be adjusted in the short run to affect the level of output in the production process.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a certain input, keeping other inputs constant.