Derf Corporation Uses a Standard Cost System in Which It

question 35

Multiple Choice

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000. The variable overhead rate variance for the period was:

• A)$5,300 Unfavorable
• B)$1,200 Unfavorable
• C)$6,300 Unfavorable
• D)$6,500 Unfavorable

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Definitions:

ADR

Alternative Dispute Resolution (ADR) is a set of techniques for resolving conflicts outside of the courts, such as arbitration or mediation.

Litigation

The process of taking legal action; the series of actions involved in suing someone or responding to a lawsuit.

Arbitration

Arbitration is a form of alternative dispute resolution where a neutral third party makes a binding decision to resolve a dispute, outside of court.

Environmental Disputes

Conflicts arising from the impact of human activities on the natural environment, often involving issues of conservation, pollution, and resource management.