Adventure Travel signed a %, year note for . The company paid an installment of for the first month. After the first payment, what is the principal balance? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

The correct option is $7,000 favorable.

Explanation:

This can be calculated using the following formula:

Standard hours for actual units produced = Actual units produced * Estimated number of hours to manufacture a completed unit = 9,000 * 2 = 18,000

Variable-overhead efficiency variance = (Actual machine hours worked - Standard machine hours for actual units produced) * Standard variable overhead cost per machine hour = (16,000 - 18,000) * 3.50 = –$7,000

Since the calculated Variable-overhead efficiency variance is negative, that implies that it is favorable,

Therefore, the correct option is $7,000 favorable.