Multiple Choice Type:
Question 8
The Roberts Company uses a flexible budget to plan and control manufacturing overhead
costs. Overhead costs are applied to products on the basis of direct labor-hours. The standard
cost card shows that 5 direct labor-hours are required per unit of product. Roberts Company
had the following budgeted and actual data for March:
Actual Budgeted
Units produced.
22,000 20,000
Direct labor-hours
105,000 100,000 *
Variable overhead costs
$91,000 $80,000
Fixed overhead costs.
$52,000 $50,000
*Represents the denominator activity for the month.
The production volume variance for March is:
a. $1,000 favorable.
b. $5,000 favorable.
c. $2,000 unfavorable.
d. $5,000 unfavorable.
e. Some other amount