The Murray Corporation Makes and Sells a Single Product

question 89

Multiple Choice

The Murray Corporation makes and sells a single product.The company recorded the following activity and cost data for May: The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour. The fixed manufacturing overhead budget variance for May was:

• A)$2,400 U
• B)$2,400 F
• C)$6,000 U
• D)$6,000 F

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Definitions:

Factory Overhead

Every expense linked to manufacturing that doesn't include the cost of direct materials and wages for direct labor.

Equivalent Units

A term used in cost accounting to express the amount of unfinished goods in terms of complete units of output.

Direct Materials

Direct materials are raw inputs that are directly consumed in the manufacturing process of a product and can be directly attributed to that product.

Direct Labor

The labor cost of workers directly involved in the production of goods or services.