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Fatal Inc. manufactures parachutes. Fixed and variable manufacturing cost pools are allocated to each parachute using budgeted assembly hours. Budgeted assembly time is 4 hours

Fatal Inc. manufactures parachutes. Fixed and variable manufacturing cost pools are allocated to each parachute using budgeted assembly hours. Budgeted assembly time is 4 hours per unit. The following table presents the amounts for July.

Actual Static

Results Budget

Number of parachutes produced 260 240

Hours of assembly time 988

Variable overhead cost per hour $28

Variable overhead cost $34,580

Fixed manufacturing overhead cost $19,800 $20,160

Required:

a. What is the efficiency variance for variable overhead costs.

A.

$2,456 favourable

B.

$1,996 favourable

C.

$3,756 favourable

D.

$1,456 favourable

b. What is the rate variance for variable overhead costs.

A.

$12,950 favourable

B.

$6,916 unfavourable

C.

$9,916 unfavourable

D.

$7,316 favourable

c. What is the rate variance for fixed overhead costs.

A.

$900 unfavourable

B.

$770 unfavourable

C.

$500 favourable

D.

$360 favourable

d. What is the production-volume variance for fixed overhead costs.

A.

$5,916 unfavourable

B.

$1,920 favourable

C.

$2,980 unfavourable

D.

$1,680 favourable

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