Danske Company Had Total Underapplied Overhead of $15,000 What Is the Production Volume Variance for May?
A) $2,000

question 116

Multiple Choice

Danske Company had total underapplied overhead of $15,000.Additional information is as follows: $$\begin{array} { | l | r | } \hline \text { Denominator hours for May } & 15,000 \\\hline \text { Actual hours worked during May } & 14,000 \\\hline \text { Standard hours allowed for May } & 12,000 \\\hline \text { Flexible budget fixed overhead cost } & \$ 45,000 \\\hline \text { Actual fixed overhead costs for May } & \$ 48,000 \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline \text { Variable Overheact } & \\\hline \begin{array}{l}\text { Applied based on standard direct labor hours } \\\text { allowed }\end{array} & \$ 42,000 \\\hline \begin{array}{l}\text { Budgeted based on standard direct labor hours }\end{array} & 38,000 \\\hline \text { Fixed Overhead: } & \\\hline \begin{array}{l}\text { Applied based on standard direct labor hours } \\\text { allowed }\end{array} & \$ 30,000 \\\hline \begin{array}{l}\text { Budgeted based on standard direct labor hours }\end{array} & 27,000 \\\hline\end{array}$ What is the production volume variance for May?

• A) $2,000.
• B) $3,000.
• C) $6,000.
• D) $9,000.

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Definitions:

Retirement Entry

An accounting entry that records the removal of fixed assets or inventory from the company's records upon their disposal or sale.

Discount On Bonds Payable

The difference between the face value of a bond and its selling price when a bond is sold for less than its face value.