The Euro Company Wants to Compare the Performance of Three

question 20

Multiple Choice

The Euro Company wants to compare the performance of three business units. All the business units produce the same product with similar output per month. The company uses a flexible budget to plan and control manufacturing overhead costs. Overhead costs are applied to products on the basis of direct labour-hours. The standard cost card shows that 5 direct labour-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: $\begin{array}{lll}&\text { Actual }&\text { Budgeted }\\ \text { Units produced } & 11,000 & 10,000 \\\text { Directlabour-hours } & 65,000 & 60,000 \\\text { Variable overhead costs } & £ 84,000 &£ 80,000 \\\text { Fiked overhead costs } & £ 44,000 &£ 40,000\end{array}$
$\text { *Represents the denom inator activity for the month. }$
German Business Unit
$\begin{array}{lll}&\text { Actual }&\text { Budgeted }\\ \text { Units produced } & 11,000 & 10,000 \\\text { Directlabour-hours } & 65,000 & 60,000 \\\text { Variable overhead costs } & £ 84,000 &£ 80,000 \\\text { Fiked overhead costs } & £ 44,000 &£ 40,000\end{array}$
$\text { *Represents the denom inator activity for the month. }$
French Business Unit
$\begin{array}{lll}&\text { Actual }&\text { Budgeted }\\ \text { Units produced } & 11,000 & 10,000 \\\text { Directlabour-hours } & 65,000 & 60,000 \\\text { Variable overhead costs } & £ 84,000 &£ 80,000 \\\text { Fiked overhead costs } & £ 44,000 &£ 40,000\end{array}$
$\text { *Represents the denom inator activity for the month. }$
-The fixed overhead volume variance for March for the German Business Unit is

• A)£1,500 favourable.
• B)£7,333 unfavourable.
• C)£2,500 unfavourable.
• D)£5,333 unfavourable.

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Definitions:

Managerial Competencies

The skills and abilities required by managers to perform their duties effectively, including leadership, strategic thinking, and decision-making.

Management Processes

Various administrative and operational activities involved in running an organization, including planning, organizing, leading, and controlling.

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The activity of building and maintaining professional or social relationships, especially to share information and opportunities.

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A computer application used for storage, organization, and manipulation of data in rows and columns, allowing for complex calculations, data analysis, and visual data representation.