The data below relate to the month of May for Sosa Inc., which uses a standard cost
Question:
The data below relate to the month of May for Sosa Inc., which uses a standard cost system and two-variance analysis of overhead:
Actual total direct labor............................................................ $43,400
Actual hours used..................................................................... 14,000
Standard hours allowed for good output................................... 15,000
Direct labor rate variance—debit.............................................. $1,400
Actual total overhead................................................................ $40,250
Budgeted fixed costs................................................................ $9,000
“Normal” activity in hours........................................................ 18,000
Total overhead application rate per standard direct labor hour.. $3.00
What was Sosa’s volume variance for May?
a. $1,250 favorable c. $1,500 favorable
b. $1,250 unfavorable d. $1,500 unfavorable
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins