(Appendix 10A) 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:
A) $2,801 U
B) $1,559 F
C) $1,468 F
D) $4,360 F

Question

(Appendix 10A) 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:
A) $2,801 U 
B) $1,559 F 
C) $1,468 F 
D) $4,360 F

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

(Appendix 10A) an Outdoor Barbecue Grill Manufacturer Uses a Standard