Wriphoff Company Uses a Standard Cost System to Collect Costs

question 38

Multiple Choice

Wriphoff Company uses a standard cost system to collect costs related to the production of its clay bud vases. Manufacturing overhead at Wriphoff is applied to production on the basis of standard direct labor-hours. The overhead standards used at Wriphoff are as follows: The standards above were based on an expected annual volume of 40,000 bud vases or 36,000 direct labor-hours. The actual results for last year were as follows:
-What was Wriphoff's fixed manufacturing overhead budget variance for last year?

• A) $7,600 favorable
• B) $9,200 unfavorable
• C) $30,416 unfavorable
• D) $38,016 unfavorable

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Definitions:

Absorption Costing

A technique in financial accounting that involves accumulating all costs of production, namely direct materials, direct labor, and overhead (both fixed and variable), into the cost base of a product.

Net Operating Income

This is the total profit of a company after operating expenses are subtracted from operating revenues but before income from investments and taxes are considered.

Operating Loss

The loss incurred when a company's operating expenses exceed its revenues, indicating that its core business operations are not profitable.

Year 1

Refers to the first year in a given context, often used in financial projections, company performance analysis, or product lifecycle evaluation.