The Phelps Company Applies Overhead Costs to Products on the Basis

question 65

Multiple Choice

The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: The budgeted direct labor-hours is used as the denominator activity for the month.
-The variable overhead efficiency variance for March is:

• A)$8,000 favorable
• B)$4,000 favorable
• C)$8,000 unfavorable
• D)$4,000 unfavorable

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Definitions:

Reasonably Possible

A term used in accounting and law to describe an outcome that, while not certain, is more than a mere possibility and should be considered or disclosed.

Merchandise Inventory

Goods that are purchased for the purpose of being sold to customers in the normal course of business.

Interest Rate

The percentage of an amount of money charged by a lender to a borrower for the use of borrowed money.

Face Amount

The total value that will be paid to beneficiaries at the maturity of an insurance policy or the principal value of a bond at its maturity.