Harris Corporation uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The company has provided the following data: The volume variance would be:
A)$2,500 F
B)$1,800 F
C)$1,800 U
D)$1,500 F

Question

Harris Corporation uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The company has provided the following data:  The volume variance would be:
A)$2,500 F 
B)$1,800 F 
C)$1,800 U 
D)$1,500 F

Quizplus · Accepted Answer

Volume variance = Fixed component of the predetermined overhead rate x (Denominator hours - Standard hours allowed for the actual output)= $3 per DLH × (5,000 DLHs - 5,500 DLHs)= $3 per DLH × (-500 DLHs)= $1,500 F

Harris Corporation Uses a Standard Cost System in Which It