Alex Corporation Has a Large Underapplied Overhead Balance in the Manufacturing

question 83

Multiple Choice

Alex Corporation has a large underapplied overhead balance in the manufacturing overhead account. This could be explained by:

• A)an unfavorable volume variance, assuming all other variances are zero.
• B)a favorable volume variance, assuming all other variances are zero.
• C)standard hours allowed for the period's output being greater than denominator hours for the period.
• D)favorable total variance for overhead.

---

Definitions:

Direct Labor Rate Variance

The difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a product.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.

Direct Labor Rate Variance

The difference between the expected cost of direct labor per unit of production and the actual cost incurred.

Direct Labor

Direct labor refers to the wages and other costs for employees who are directly involved in the production of goods or services.