The data below relate to the month of april for monroe, inc., which uses a standard cost system and a two-variance analysis of factory overhead:

actual direct labor hours used

16,500

standard direct labor hours allowed

16,250

actual total factory overhead

$53,200

budgeted fixed factory overhead

$12,000

budgeted activity in hours

16,000

total overhead application rate per standard direct labor hour

$3.25

variable overhead application rate per standard direct labor hour

$2.50

what was monroe's production-volume variance for april?

a.

$187.50 favorable

b.

$187.50 unfavorable

c.

$437.50 favorable

d.

$437.50 unfavorable

Fixed overhead absorption rate

= Budgeted fixed overhead

  Budgeted activity level

= $12,000

    16,000 hours

= $0.75 per hour

Production volume variance

= (Standard hours - Budgeted hours) x Fixed overhead rate

= (16,250 - 16,000) x $0.75

= $187.5(F)

The correct answer is A

Explanation:

First and foremost, we need to calculate fixed overhead absorption rate, which is the ratio of budgeted fixed overhead to budgeted hours. then, we will calculate the production volume variance, which is the difference between standard hours and budgeted hours multiplied by fixed overhead absorption rate.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

correct, but each time you dont pay the price of the penalty can increase.