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Questions 7 - 11 refer to the following:

ABC Company has set the following standards for the production of one case of Zesty Pretzels:

Usage Cost

Direct Materials .9 pounds $5 per pound

Direct Labor .4 hours $15 per hour

Variable Overhead .4 hours $5 per hour

Actual information recorded by ABC Company for the month of March is below:

• Purchased 7,000 pounds at a cost of $31,500
• Used 5,616 pounds to make 5,200 good units
• Paid $32,214 for 2,184 hours of labor.
• Actual variable OH costs were $11,600.

7. The materials price variance for March is:

a. $3,500 unfavorable c. $3,420 unfavorable

b. $3,500 favorable d. $3,420 favorable

8. The material quantity variance for March is:

a. $11,600 unfavorable c. $4,680 unfavorable

b. $11,600 favorable d. $4,680 favorable

9. The labor rate variance for March is:

a. $546 unfavorable c. $1,014 unfavorable

b. $546 favorable d. $1,014 favorable

10. The labor efficiency variance for March is:

a. $1,560 unfavorable c. $9,240 unfavorable

b. $1,560 favorable d. $9,240 favorable

11. The variable overhead spending variance for March is:

a. $1,400 unfavorable c. $680 unfavorable

b. $1,400 favorable d. $680 favorable

12. An unfavorable fixed overhead volume variance would indicate that:

a. fewer units were made during the period than had been budgeted

b. more units were made during the period than had been budgeted

c. fewer labor hours were worked during the period than had been budgeted

d. more labor hours were worked during the period than had been budgeted

The following information applies to questions 13 & 14:

Actual fixed overhead cost: $35,200

Budgeted fixed overhead cost: $35,000

Standard fixed overhead rate, based on 10,000 machine hours: $3.50 per hour

Standard machine hours per unit: 1/2 hour

Actual units produced: 17,600

13. Compute the fixed overhead volume variance:

a. $200 unfavorable c. $200 favorable

b. $4,400 favorable d. $4,200 unfavorable

14. Compute the fixed overhead budget variance:

a. $4,400 favorable c. $4,200 favorable

b. $200 unfavorable d. $200 favorable

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