(Appendix 11A)Diseth Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The company bases its predetermined overhead rate on 5, 300 machine-hours.The company's total budgeted fixed manufacturing overhead is $12, 720.In the most recent month, the total actual fixed manufacturing overhead was $12, 370.The company actually worked 5, 350 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 5, 540 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A)$350 Favorable
B)$120 Favorable
C)$120 Unfavorable
D)$576 Favorable

Question

Quizplus · Accepted Answer

Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $12, 720 ÷ 5, 300 machine-hours = $2.40 per machine-hour
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $12, 720 - (5, 540 machine-hours × $2.40 per machine-hour)
= $12, 720 - $13, 296
= $576 F

(Appendix 11A)Diseth Corporation Applies Manufacturing Overhead to Products on the Basis