Behring Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: $\begin{array}{lrr}&\text { Original Budget }&\text {Actual Costs }\\text { Fixed overhead costs: }\
\text {Supervision. }&\$3,840&\$3,880 \
\text { Utilities.}&5,120&4,900 \
\text {Factory depreciation. }&18,880&18,440 \
\text {Total overhead cost }&\$ 27,40&\$27,220\
\end{array}$ The company based its original budget on 3,200 machine-hours. The company actually worked 3,170 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,250 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?
A)$435 favorable
B)$261 unfavorable
C)$435 unfavorable
D)$261 favorable

Question

Quizplus · Accepted Answer

The overall fixed manufacturing overhead volume variance is unfavorable because the actual machine-hours worked (3,170) were less than the budgeted machine-hours (3,200). This means that the company incurred more fixed overhead costs than it should have for the actual level of production. The unfavorable volume variance is calculated as follows:Unfavorable volume variance = (Actual machine-hours - Budgeted machine-hours) x Standard fixed overhead rate= (3,170 - 3,200) x $8.50= $261

Behring Corporation Applies Manufacturing Overhead to Products on the Basis