Martin Company, Which Applies Overhead to Production on the Basis

question 57

Multiple Choice

Martin Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 9,000
Actual variable overhead incurred: $54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: $3.50
If Martin estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:

• A) $1,600 favorable.
• B) $1,600 unfavorable.
• C) $7,000 favorable.
• D) $7,000 unfavorable.
• E) None of the other answers are correct.

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Definitions:

Families' Budgets

Financial plans created by families to manage their income, expenses, savings, and investments over a specific period.

Demand Elastic

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with high elasticity indicating a significant response.

Demand Inelastic

Describes a situation where the quantity demanded of a good or service is relatively unaffected by changes in its price.

Price Elasticity

A formula that calculates the demand's sensitivity to the good's price variations.