Mzimba Sofa Company Has Developed the Following Manufacturing Overhead Standards

question 51

Multiple Choice

Mzimba Sofa Company has developed the following manufacturing overhead standards for its sofa production. Manufacturing overhead at Mzimba is applied to production on the basis of standard machine-hours. The above standards were based on an expected annual volume of 20,000 sofas. The actual results last year were as follows:
-What was Mzimba's variable overhead rate variance?

• A) $8,514 favorable
• B) $8,766 unfavorable
• C) $17,280 unfavorable
• D) $54,846 unfavorable

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Definitions:

Incremental Value

The additional or extra value generated by taking a particular action, often compared to doing nothing or choosing an alternative.

Goodwill

An intangible asset that arises when a company acquires another business for more than the value of its tangible and identifiable intangible assets.

Fixed Assets

Long-term tangible assets that a company uses in its operations and that are not expected to be consumed or converted into cash within one year.

Long-Term Debt

Represents loans and financial obligations lasting over one year that a company owes and is recorded on its balance sheet.