(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:

-The fixed manufacturing overhead volume variance for the period is closest to:
A) $1,240 U
B) $496 F
C) $1,736 F
D) $516 F

Question

(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
  The following data pertain to operations for the most recent period:
 
-The fixed manufacturing overhead volume variance for the period is closest to:
A) $1,240 U 
B) $496 F 
C) $1,736 F 
D) $516 F

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $17,360 ÷ 1,400 hours = $12.40 per hour
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $17,360 - (1,440 hours × $12.40 per hour)
= $17,360 - $17,856
= $496 F

(Appendix 10A) a Furniture Manufacturer Uses a Standard Costing System