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Over and Under, Inc. manufactures weaving looms. Before the period began, the company prepared the following manufacturing overhead budget for an expected activity level of 15,000 direct labor hours (DL hrs): Variable Manufacturing Overhead Costs $322,500 Fixed Manufacturing Overhead Costs $205,000 By the end of the period, the company noted that 3,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs incurred during the period was $545,000, of which, $325,000 was fixed. Which of the following statements is incorrect for the above data? A. The master budget variance related to fixed manufacturing overhead costs for the period equals $120,000. B. The total volume variance can be calculated by multiplying the unit variable cost by the difference between the expected DL hrs and the actual DL hrs. O C. The volume variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected. The company's flexible budget variance for total manufacturing overhead costs during the period equals $82.000.

Over and Under, Inc. manufactures weaving looms. Before the period began, the company prepared the following manufacturing overhead budget for an expected activity level of 15,000 direct labor hours (DL hrs): Variable Manufacturing Overhead Costs $322,500 Fixed Manufacturing Overhead Costs $205,000 By the end of the period, the company noted that 3,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs incurred during the period was $545,000, of which, $325,000 was fixed. Which of the following statements is incorrect for the above data? A. The master budget variance related to fixed manufacturing overhead costs for the period equals $120,000. B. The total volume variance can be calculated by multiplying the unit variable cost by the difference between the expected DL hrs and the actual DL hrs. O C. The volume variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected. The company's flexible budget variance for total manufacturing overhead costs during the period equals $82.000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Over and Under, Inc. manufactures weaving looms. Before the period began, the company prepared the following manufacturing overhead budget for an expected activity level of 15,000 direct labor hours (DL hrs): Variable Manufacturing Overhead Costs $322,500 Fixed Manufacturing Overhead Costs $205,000 By the end of the period, the company noted that 3,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs incurred during the period was $545,000, of which, $325,000 was fixed. Which of the following statements is incorrect for the above data? O A. The master budget variance related to fixed manufacturing overhead costs for the period equals $120,000. O B. The total volume variance can be calculated by multiplying the unit variable cost by the difference between the expected DL hrs and the actual DL hrs. O c. The volume variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected. D. The company's flexible budget variance for total manufacturing overhead costs during the period equals $82,000. E. The flexible budget is populated using the cost behavior equation developed from the actual manufacturing overhead costs.
Transcribed Image Text:Over and Under, Inc. manufactures weaving looms. Before the period began, the company prepared the following manufacturing overhead budget for an expected activity level of 15,000 direct labor hours (DL hrs): Variable Manufacturing Overhead Costs $322,500 Fixed Manufacturing Overhead Costs $205,000 By the end of the period, the company noted that 3,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs incurred during the period was $545,000, of which, $325,000 was fixed. Which of the following statements is incorrect for the above data? O A. The master budget variance related to fixed manufacturing overhead costs for the period equals $120,000. O B. The total volume variance can be calculated by multiplying the unit variable cost by the difference between the expected DL hrs and the actual DL hrs. O c. The volume variance for variable manufacturing overhead costs is favorable because fewer DL hrs were logged during production than expected. D. The company's flexible budget variance for total manufacturing overhead costs during the period equals $82,000. E. The flexible budget is populated using the cost behavior equation developed from the actual manufacturing overhead costs.
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