Denby 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: The company based its original budget on 6,400 machine-hours.The company actually worked 6,710 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6,540 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A)$3,286 Favorable
B)$1,484 Unfavorable
C)$3,286 Unfavorable
D)$1,484 Favorable

Question

Denby 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:  The company based its original budget on 6,400 machine-hours.The company actually worked 6,710 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6,540 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A)$3,286 Favorable 
B)$1,484 Unfavorable 
C)$3,286 Unfavorable 
D)$1,484 Favorable

Quizplus · Accepted Answer

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $67,840 ÷ 6,400 machine-hours = $10.60 per machine-hour
= $67,840 - (6,540 machine-hours × $10.60 per machine-hour)
= $67,840 - $69,324
= $1,484 F

Denby Corporation Applies Manufacturing Overhead to Products on the Basis