Derf Corporation Uses a Standard Cost System in Which It

question 14

Multiple Choice

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000.
-The fixed manufacturing overhead budget variance for the period was:

• A)$6,300 Unfavorable
• B)$2,500 Unfavorable
• C)$1,500 Unfavorable
• D)$1,000 Unfavorable

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Definitions:

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