Mazzo Corporation Makes a Product with the Following Standards for Direct

question 134

Multiple Choice

Mazzo Corporation makes a product with the following standards for direct labor and variable overhead: In February the company's budgeted production was 5,000 units, but the actual production was 5,100 units. The company used 2,090 direct labor-hours to produce this output. The actual variable overhead cost was $6,688. The company applies variable overhead on the basis of direct labor-hours.
-The variable overhead efficiency variance for February is:

• A)$150 F
• B)$160 F
• C)$160 U
• D)$150 U

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Definitions:

Traditional Costing System

An accounting method that applies indirect costs to products based on a predetermined overhead rate, without distinguishing between activities or processes.

Manufacturing Overhead

All indirect manufacturing costs, encompassing expenses such as maintenance, utilities, and salaries not directly tied to specific units produced.

Activity-Based Costing

Activity-Based Costing is an accounting method that assigns costs to products or services based on the activities they require.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or job orders based on a specific activity base, such as machine hours.