Rodarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours.In the most recent month,the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6,480 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A) $240 Favorable
B) $144 Unfavorable
C) $240 Unfavorable
D) $96 Favorable

Question

Quizplus · Accepted Answer

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= (6,600 machine-hours × $1.20 per machine-hour) - (6,480 machine-hours × $1.20 per machine-hour)
= $7,920 - $7,776
= $144 U

Rodarta Corporation Applies Manufacturing Overhead to Products on the Basis