Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Manufacturing overhead is applied based on units produced.Actual production for March was 6,300 cup holders.Standards and actual costs follow for March: $\begin{array}{|l|c|c|}\hline & \text { Standards } & \text { Actual } \
\hline
\text { Materials } & 1.1 \text { pounds } @ \$ 2.40 \text { a pound }&6,400 \text { pounds purchased for } \$ 15,040 \text {; }\&& 6,450 \text { pounds used }\\hline \text { Labor } & 0.10 \text { hours } @ \$ 14.00 \text { per hour } & 620 \text { hours } @ \$ 14.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 16,800 & \$ 18,400 \\hline \text { Eixed overhead } & \$ 9,600 & \$ 10,300 \
\hline
\end{array}$ How much is the overhead volume variance?

Question

Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Manufacturing overhead is applied based on units produced.Actual production for March was 6,300 cup holders.Standards and actual costs follow for March: $\begin{array}{|l|c|c|}\hline & \text { Standards } & \text { Actual } \
 \hline 
\text { Materials } & 1.1 \text { pounds } @ \$ 2.40 \text { a pound }&6,400 \text { pounds purchased for } \$ 15,040 \text {; }\&& 6,450 \text { pounds used }\\hline \text { Labor } & 0.10 \text { hours } @ \$ 14.00 \text { per hour } & 620 \text { hours } @ \$ 14.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 16,800 & \$ 18,400  \\hline \text { Eixed overhead } & \$ 9,600 & \$ 10,300 \
\hline
\end{array}$ How much is the overhead volume variance?

Quizplus · Accepted Answer

The overhead volume variance is calculated as the difference between the budgeted overhead based on standard units produced and the actual overhead based on actual units produced. Since manufacturing overhead is applied based on units produced, and the actual production was higher than budgeted (6,300 vs. 6,000), this typically results in a favorable variance if the fixed overhead rate per unit decreases due to higher production volume. Given the information, the exact calculation of the variance isn't provided, but the concept of higher actual production leading to a favorable variance applies, making choice B the correct answer based on the information given.

Steep, Inc How Much Is the Overhead Volume Variance? A)$1,460 Unfavorable B)$480

Steep, Inc How Much Is the Overhead Volume Variance?
A)$1,460 Unfavorable
B)$480