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Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required
Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 5,400 units. Manufacturing overhead was budgeted at $140,400 for the period; 20 percent of this cost was fixed. The 9,900 hours worked during the period resulted in production of 4,845 units. Variable manufacturing overhead cost incurred was $112,820 and fixed manufacturing overhead cost was $29,330. The fixed manufacturing overhead budget variance for the period was: O $1,250 Unfavorable O $2,886 Unfavorable O $4,136 Unfavorable $11,110 Unfavorable
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