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Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead

Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead $ 38,700
Budgeted fixed manufacturing overhead 170,700
Total budgeted manufacturing overhead $ 209,400
Budgeted production (a) 20,000 units
Standard hours per unit (b) 1.50 machine-hours
Budgeted hours (a) (b) 30,000 machine-hours
Applying Overhead:
Actual production (a) 15,000 units
Standard hours per unit (b) 1.50 machine-hours
Standard hours allowed for the actual production (a) (b) 22,500 machine-hours
Actual Overhead and Hours:
Actual variable manufacturing overhead $ 9,812
Actual fixed manufacturing overhead 185,700
Total actual manufacturing overhead $ 195,512
Actual hours 22,300 machine-hours

The total of the overhead variances is:

Multiple Choice

  • $38,462 F

  • $13,888 U

  • $38,462 U

  • $13,888 F

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