(Solved): Merry and Pippin Say Keep up the Good Work (KGW) is in the process of evaluation their budget varia ...

Expert Answer

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The correct answer is E) There will be an unfavorable volume variance because the actual volume is greater than the standard volume.
Volume variance is the difference between the actual and standard volume of activity, multiplied by the standard price per unit. In this case, the standard volume of activity is 10,000 direct labor hours, and the actual volume is 10,800 hours. Since the actual volume is greater than the standard volume, there will be an unfavorable volume variance.
Option A is incorrect because a favorable volume variance occurs when the actual volume is less than the standard volume.
Option B is incorrect because a favorable volume variance occurs when the actual volume is less than the standard volume.
Option C is incorrect because an unfavorable volume variance occurs when the actual volume is greater than the standard volume.
Option D is incorrect because there is enough information provided to answer the question.

The answer to this question lies in understanding the concept of volume variance.
Volume variance is the difference between the actual and standard volume of activity, multiplied by the standard price per unit. In this case, the standard volume of activity is 10,000 direct labor hours, and the actual volume is 10,800 hours.
To determine whether there will be a favorable or unfavorable volume variance, we need to compare the actual volume with the standard volume. Since the actual volume is greater than the standard volume, there will be an unfavorable volume variance.
Option A is incorrect because a favorable volume variance occurs when the actual volume is less than the standard volume.
Option B is incorrect because a favorable volume variance occurs when the actual volume is less than the standard volume.
Option C is incorrect because an unfavorable volume variance occurs when the actual volume is greater than the standard volume.
Option D is incorrect because there is enough information provided to answer the question. We have the standard volume of activity and the actual volume of activity, which are the two main components needed to calculate the volume variance.