The Ferris Company Applies Manufacturing Overhead Costs to Products on the Basis

Multiple Choice

The Ferris Company applies manufacturing overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 3 direct labor-hours are required per unit of product. For August, the company budgeted to work 90,000 direct labor-hours and to incur the following total manufacturing overhead costs: During August, the company completed 28,000 units of product, worked 86,000 direct labor-hours, and incurred the following total manufacturing overhead costs: The denominator activity in the predetermined overhead rate is 90,000 direct labor-hours.
-For August, the fixed manufacturing overhead budget variance is:

A) $3,500 F
B) $3,500 U
C) $3,200 F
D) $3,200 U