Calculate the Total Factory Overhead Cost Variance Using the Above

question 49

Multiple Choice

Calculate the total factory overhead cost variance using the above information:

• A) $4,866.75 Unfavorable
• B) $4,866.75 Favorable
• C) $8,981.75 Favorable
• D) $8,981.75 Unfavorable

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Definitions:

Ordering Costs

The expenses associated with the process of requisitioning, purchasing, and receiving goods and services; includes costs of paperwork, communication, and inspections.

Maintaining Inventory

Activities and strategies involved in keeping an appropriate level of stock to meet demand without incurring excessive holding costs or stockouts.

Shrinkage

The loss of inventory that can result from theft, damage, or errors in the inventory management process.

Production Order Quantity Model

A mathematical model used in operations management to determine the optimal order quantity that minimizes total inventory costs.