Question
Reed Company employs standard costing and applies overhead on the basis of direct labor hours. The standards and actual operating data for the month are
Reed Company employs standard costing and applies overhead on the basis of direct labor hours. The standards and actual operating data for the month are as follows:
| Standards | |
| Direct labor hours per unit | 2.5 hours |
| Variable overhead per direct labor hour | $1.75 |
| Fixed overhead per direct labor hour | $3.10 |
| Budgeted variable overhead | $21,875 |
| Budgeted fixed overhead | $38,750 |
| Standard hours allowed | 11,250 hours |
| Budgeted hours | 12,500 hours |
| Actual | |
| Direct labor hours | 10,000 hours |
| Variable overhead | $26,250 |
| Fixed overhead | $38,000 |
The volume variance is:
| A. | $4,750 F | |
| B. | none of these | |
| C. | $3,875 F | |
| D. | $3,875 UF | |
| E. | $4,750 UF |
The controllable variance is:
| A. | $6,562.50 UF | |
| B. | $8,750 UF | |
| C. | $6,562.50 F | |
| D. | none of these | |
| E. | $8,750 F |
The overall overhead variance is:
| A. | none of these | |
| B. | $15,750 F | |
| C. | $15,750 UF | |
| D. | $9,687.50 F | |
| E. | $9,687.50 UF |
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Auditing
Authors: Thomas D. Hubbard, J. R. Johnson, Steve Johnson, Joel D. Hubbard
6th Edition
0873932609, 9780873932608
