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Hermetic Systems allocates manufacturing overhead based on machine hours. Each connector should require 13 machine hours. According to the static budget, Hermetic expected to incur the following:
1,300 machine hours per month (100 connectors x 13 machine hours per connector)
$6,500 in variable manufacturing overhead costs
$9450 in fixed manufacturing costs
During August, Hermetic actually used 800 machine hours to make 85 connectors and spent $5,200 in variable manufacturing $8,800 in fixed manufacturing overhead costs. Calculate the variable overhead cost variance for Hermetic.
A. $2,725 Favorable
B. $325 Favorable
C. $1,525 Favorable
D. $1,200 Unfavorable
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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