Answer Happy

If the denominator activity level exceeds the standard hours allowed for the output, the volume variance will be favourable. True or False True False
Reed Company applies manufacturing overhead costs to products on the basis of direct labour-hours. The standard cost card shows that 6 direct labour-hours are required per unit of product. For August, the company budgeted to work 180,000 direct labour-hours and to incur the following total manufacturing overhead costs: Total variable overhead costs $198,000 $237,600 Total fixed overhead costs During August, the company completed 28,000 units of product, worked 172,000 direct labour-hours, and incurred the following total manufacturing overhead costs: Total variable overhead costs Total fixed overhead costs $197,800 $230, 600 The denominator activity in the predetermined overhead rate is 180,000 direct labour-hours. (Note that this is the same data that was provided for the previous question.) The fixed overhead budget variance for August is: Multiple Choice $7,000 F $7,000 U $6,400 F $6,400 U