Derf Corporation Uses a Standard Cost System in Which It

question 21

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 variable overhead rate variance for the period was:

• A)$5,300 Unfavorable
• B)$1,200 Unfavorable
• C)$6,300 Unfavorable
• D)$6,500 Unfavorable

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Definitions:

Union Membership

Being a formal member of a labor union, an organization that represents the collective interests of employees in negotiations with employers over wages, benefits, and working conditions.

Workplace Safety

Practices and policies in a place of employment that are designed to protect the wellbeing of employees, visitors, and the workplace environment.

Manufacturing Sector

A segment of the economy that is involved in the production of goods and materials through physical, mechanical, or chemical processes.

Labor Relations

The study and practice of managing relationships between employers and the workforce, often focusing on collective bargaining, union-management relations, and workplace conflict resolution.