(Appendix 11A)Derf Corporation Uses a Standard Cost System in Which

question 43

Multiple Choice

(Appendix 11A) 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 efficiency variance for the period was:

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

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Definitions:

T-Bill Rate

The yield on U.S. Treasury bills, which are short-term government securities, serving as a benchmark for short-term interest rates.

Covariances

Covariance is a measure used in statistics to determine how much two random variables vary together.

Portfolio Variance

A measurement of the dispersion of returns of a portfolio, indicating the degree of investment risk.

Risky Securities

Financial instruments that carry a higher degree of uncertainty and a higher risk of loss, such as stocks.