Haley Fans manufactures and distributes circulators. The standard and actual costs for the manufacture of circulators follows:
$$\begin{array} { | l | l | }
\hline { \text { Standard Costs } } & \text { Actual Costs } \
\hline \text { Variable cost, } \$ 24 \text { per unit } & \text { Total variable cost, } \$ 12,300 \
\hline \text { Fixed cost, } \$ 40 \text { per unit } & \text { Total fixed cost, } \$ 19,250\
\hline
\end{array}$$
Budgeted factory overhead was $32,000. Overhead applied is based on the number of circulator units produced. The company estimated that 500 circulators would be produced, however only 480 were produced. How much is Haley's overhead volume variance for 2014?

Question

Haley Fans manufactures and distributes circulators. The standard and actual costs for the manufacture of circulators follows:
$$\begin{array} { | l | l | } 
\hline  { \text { Standard Costs } } & \text { Actual Costs } \
\hline \text { Variable cost, } \$ 24 \text { per unit } & \text { Total variable cost, } \$ 12,300 \
\hline \text { Fixed cost, } \$ 40 \text { per unit } & \text { Total fixed cost, } \$ 19,250\
\hline
\end{array}$$
Budgeted factory overhead was $32,000. Overhead applied is based on the number of circulator units produced. The company estimated that 500 circulators would be produced, however only 480 were produced. How much is Haley's overhead volume variance for 2014?

Quizplus · Accepted Answer

The overhead volume variance is calculated as the difference between the budgeted overhead and the applied overhead. In this case, the budgeted overhead is $32,000 and the applied overhead is $19,250. Therefore, the overhead volume variance is $32,000 - $19,250 = $12,750 unfavorable.

Haley Fans Manufactures and Distributes Circulators Budgeted Factory Overhead Was $32,000