Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below:
The company based its original budget on 5,100 machine-hours.The company actually worked 4,800 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 4,980 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A) $3,150 Unfavorable
B) $3,150 Favorable
C) $1,260 Unfavorable
D) $1,260 Favorable

Question

Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below:
 The company based its original budget on 5,100 machine-hours.The company actually worked 4,800 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 4,980 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A) $3,150 Unfavorable 
B) $3,150 Favorable 
C) $1,260 Unfavorable 
D) $1,260 Favorable

Quizplus · Accepted Answer

11ea7761_172f_4c75_81a5_9731a5fcccba_TB2580_00 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $53,550 ÷ 5,100 machine-hours = $10.50 per machine-hour
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $53,550 - (4,980 machine-hours × $10.50 per machine-hour)
= $53,550 - $52,290
= $1,260 U

Lossing Corporation Applies Manufacturing Overhead to Products on the Basis