Question 1
If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance, the variable overhead efficiency variance will be
◦ favorable.
◦ zero.
◦ unfavorable.
◦ Undeterminable based on the given information.
Question 2
Paula's Peach Preserves produces jars of gourmet peach jam. Paula prepared the following standard cost card for each 18-ounce jar of jam:
| Direct materials | $4.11 |
| Direct labor | 1.50 |
| Variable overhead | 1.02 |
| Fixed overhead | 1.35 |
| Total standard cost per jar | $7.98 |
During the year Paula produced 153,225 jars of jam and incurred $210,000 in fixed manufacturing overhead. Paula's fixed overhead spending variance was $7,500 unfavorable. What was Paula's budgeted level of production (if necessary, round your answer to the nearest whole jar)?
◦ 71,854 jars
◦ 150,000 jars
◦ 161,112 jars
◦ 155,556 jars
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