Pohl Corporation Uses a Standard Cost System in Which Manufacturing

question 18

Multiple Choice

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours:

During June, 17,000 machine-hours were used to complete 13,000 units of product, and the following actual total overhead costs were incurred:

At standard, each unit of finished product requires 1.4 hours of machine time.
-The variable overhead efficiency variance for utilities cost for June was

• A)$400 F
• B)$400 U
• C)$600 F
• D)$600 U

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Definitions:

User Cost

The cost of using a durable good over time, considering depreciation and the opportunity cost of not investing funds elsewhere.

Economic Depreciation

A measure of the decrease in value of an asset over time due to use, wear and tear, and obsolescence.

Marginal Product

The increase in output that arises from an additional unit of input, holding all other inputs constant.

Labor

The human effort, both physical and mental, used in the production of goods and services.