Security Doors Has a Standard Variable Overhead Rate of $4

question 46

Multiple Choice

Security Doors has a standard variable overhead rate of $4 per direct labour hour. The standard quantity of direct labour per unit of production is 3 hours. The company's static budget was based on 50 000 units. Actual results for the year are as follows.
What was Security Door's variable overhead efficiency variance?

• A) $45 000 favourable
• B) $60 000 favourable
• C) $45 000 unfavourable
• D) $60 000 unfavourable

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Definitions:

Crossover Rate

The point at which two or more projects have the same net present value or rate of return, used in capital budgeting to compare projects.

Mutually Exclusive

Situations or events that cannot occur at the same time, often referring to investment choices or project decisions in finance.

Required Rate

The minimum return an investor expects to achieve by investing in a project, often used as a benchmark to assess its viability.

Average Accounting Return

The average accounting return is a financial ratio that measures the profitability of an investment as the average net income the investment generates divided by the book value of the investment's initial cost.