An outdoor barbecue grill 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:

Question

An outdoor barbecue grill 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:

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $50,140 ÷ 4,600 hours = $10.90 per DLH
Volume variance = Budgeted fixed overhead cost − Fixed overhead applied to work in process
= $50,140 − (4,743 DLHs × $10.90 per DLH)
= $50,140.00 − $51,698.70
= $1,558.70 F

An Outdoor Barbecue Grill Manufacturer Uses a Standard Costing System