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The Following Information Is Available for the Danske Company Danske Company Had Total Underapplied Overhead of $15,000

Question 108

Multiple Choice

The following information is available for the Danske Company:
 Denominator hours for May 15,000Actual hours worked during May 14,000Standard hours allowed for May 12,000Flexible budget fixed overhead cost $45,000 Actual fixed overhead costs for May $48,000\begin{array}{lrr} \text { Denominator hours for May } &15,000\\ \text {Actual hours worked during May } &14,000\\ \text {Standard hours allowed for May } &12,000\\ \text {Flexible budget fixed overhead cost } &\$45,000\\\text { Actual fixed overhead costs for May } &\$48,000\\\end{array}



Danske Company had total underapplied overhead of $15,000. Additional information is as follows:
Variable Overhead:Applied based on standard direct labor hours allowed  Budgeted based on standard direct labor hoursFixed Overhead:Applied based on standard direct labor hours allowed Budgeted based on standard direct labor hours$42,00038,000$30,00027,000\begin{array}{c}\begin{array}{lll} \text {Variable Overhead:}\\ \text {Applied based on standard direct labor hours allowed }\\\text { Budgeted based on standard direct labor hours}\\\\ \text {Fixed Overhead:}\\ \text {Applied based on standard direct labor hours allowed }\\ \text {Budgeted based on standard direct labor hours}\end{array}\begin{array}{lll}\\\$42,000\\38,000\\\\\\\$30,000\\27,000\end{array}\end{array}





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Is the production volume variance favorable or unfavorable?


A) Favorable.
B) Unfavorable.

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