Sommers Fabrication Corporation Has a Standard Cost System in Which

question 24

Multiple Choice

Sommers Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $9.70 per MH.The company budgeted its fixed manufacturing overhead cost at $67,000 for the month.During the month,the actual total variable manufacturing overhead was $66,660 and the actual total fixed manufacturing overhead was $70,000.The actual level of activity for the period was 6,600 MHs.What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?

• A)$2,640 unfavorable
• B)$5,640 favorable
• C)$2,640 favorable
• D)$5,640 unfavorable

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Definitions:

Consumption Goods

Products and services that are used by individuals for personal enjoyment and satisfaction, not for further production.

Supply-Side Economists

Economists who believe that reducing tax rates and deregulation will stimulate economic growth by increasing production.

Real Interest Rate

The excess of the interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.