Hugh Corporation Applies Manufacturing Overhead to Products on the Basis

question 46

Multiple Choice

Hugh Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below:
The company based its original budget on 6,700 machine-hours. The company actually worked 6,810 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,940 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

• A) $960 favorable
• B) $370 unfavorable
• C) $960 unfavorable
• D) $370 favorable

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Definitions:

Average Price

Average price is a calculation that sums up the cost of multiple items or services and divides by the number of units to find the mean cost.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and manufacturing overhead.

Markdown

A reduction in the selling price of goods, often used as a strategy to clear inventory or stimulate sales.

Net Margin

A profitability metric calculated as net income divided by revenue, expressed as a percentage, indicating the percentage of revenue that translates into profit.