The Standard Factory Overhead Rate Is $7

question 89

Multiple Choice

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours.The standard cost and the actual cost of factory overhead for the production of
15,000 units during August were as follows:

What is the amount of the variable factory overhead controllable variance?

• A)$12,000 unfavorable
• B)$12,000 favorable
• C)$14,000 unfavorable
• D)$26,000 unfavorable

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Definitions:

Open Charge Account

A credit account that allows the account holder to purchase goods or services on credit and pay for them at a later date.

Line of Credit

A credit facility extended by a bank or financial institution to a government, business, or individual, allowing them to borrow up to a predetermined limit.

Price Lining

A pricing strategy where products are sold at a limited number of price points, each representing a different level of quality or features.

Prestige Pricing

A pricing strategy where prices are set higher than normal because the product or service is perceived to be more prestigious or luxurious.