(Appendix 11A)A manufacturer of playground equipment 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)$2, 256 F
B)$2, 331 F
C)$3, 089 U
D)$5, 420 F

Question

(Appendix 11A)A manufacturer of playground equipment 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)$2, 256 F 
B)$2, 331 F 
C)$3, 089 U 
D)$5, 420 F

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $40, 650 ÷ 3, 000 MHs = $13.55 per MH
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $40, 650 - (3, 172 MHs × $13.55 per MH)
= $40, 650 - $42, 980.60
= $2, 330.60 F

(Appendix 11A)A Manufacturer of Playground Equipment Uses a Standard Costing