Question

1. Cornell Industries is a manufacturing company that produces a single product known as “Black Hole Sun” telescopes. In analyzing production results, standard costs are used, and are as follows: Raw Materials per Unit 1 Pound @ $10.00 Per Pound Direct Labor per Unit 2 Hours @ $ 4.00 Per Hour Factory Overhead per Unit 2 Hours @ $ 1.25 Per Hour Budgeted fixed overhead for standard hours allowed for April production is $8,000. Cost applicable to April production are as follows: Production Information Actual Cost Standard Cost Raw Materials 11,000 Pounds $121,000 $100,000 Direct Labor 25,000 Hours $105,000 $ 82,400 Factory Overhead $ 31,930 $ 25,750 Calculate the following variances (as either favorable or unfavorable):

Factory overhead budget efficiency and spending volume variances A) $5,500 Unfavorable; $7,320 Favorable B) $5,500 Favorable; $7,320 Unfavorable C) $4,400 Favorable; $1,820 Unfavorable D) $4,400 Unfavorable; $1,820 Favorable

Answer 1

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