Question
Able Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on the
Able Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard direct labor-hours (DLHs). The standard overhead costs are shown below: *Based on 300,000 DLHs per month. The following information is available for the month of October: Plans called for the production of 60,000 switches. 56,000 switches were actually produced. 275,000 direct labor-hours were worked at a total cost of $2,550,000. Actual variable manufacturing overhead costs were $2,340,000. Actual fixed manufacturing overhead costs were $3,750,000. The fixed manufacturing overhead budget variance for October was:
$48,000 Unfavorable |
$150,000 Unfavorable |
$300,000 Favorable |
$390,000 Unfavorable |
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