Derf Corporation Uses a Standard Cost System in Which It

Multiple Choice

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000. The fixed manufacturing overhead budget variance for the period was:

A) $6,300 Unfavorable
B) $2,500 Unfavorable
C) $1,500 Unfavorable
D) $1,000 Unfavorable