A Manufacturer of Industrial Equipment Has a Standard Costing System

Multiple Choice

A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{|l|r|}\hline \text { Denominator Level of Activity } & 9,000 \mathrm{DLHs} \\\hline \text { Overhead Costs at the Denominator Activity Level: } & \\\hline \text { Variable Overhead Cost } & \$ 90,700 \\\hline \text { Fixed Overhead Cost } & \$ 102,800 \\\hline\end{array}$
$\text { The following data pertain to operations for the most recent period: }$
$\begin{array}{|l|r|}\hline \text { Actual Hours } & 7,800 \mathrm{DLHs} \\\hline \text { Standard Hours Allowed for the Actual Output } & 7,765 \mathrm{DLHs} \\\hline \text { Actual Total Variable Overhead Cost } & \$ 54,210 \\\hline \text { Actual Total Fixed Overhead Cost } & \$ 100,200 \\\hline\end{array}$
-Which of the following is NOT true for variable manufacturing overhead costs in a standard costing system?

A) No volume variance is ever reported.
B) The flexible variable overhead allowance for the standard hours allowed for the output is the same as the applied total variable overhead.
C) The slope of the budgeted variable overhead line is the same as the slope of the applied variable overhead line.
D) Any underapplied or overapplied overhead is equal to the variable overhead spending variance.