The Standard Factory Overhead Rate Is $10 Per Direct Labor

question 81

Multiple Choice

The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: What is the amount of the factory overhead volume variance?

• A) $12,500 favorable
• B) $10,000 unfavorable
• C) $12,500 unfavorable
• D) $10,000 favorable

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Definitions:

Tax Revenue

The income that a government receives from taxes imposed on individuals and businesses.

Tax

Mandatory financial charge imposed by a government on individuals, corporations, or transactions to fund public expenditures.

Demand Curve

A visual depiction showing how the demand for a product varies with its price, usually illustrated with a line that slopes downwards towards the right.

Buyers

Persons or organizations that acquire products or services in the marketplace.