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?

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?

Quizplus · Accepted Answer

First, we need to calculate the standard variable overhead rate per machine-hour:
Budgeted variable manufacturing overhead costs / Budgeted machine-hours = $17,850 / 5,100 = $3.50 per machine-hour

Next, we can calculate the total variable manufacturing overhead variance:
Actual machine-hours * (Standard rate - Actual rate) = 4,800 * ($3.50 - $3.60) = $480 Unfavorable

Then, we can calculate the fixed manufacturing overhead volume variance:
Budgeted fixed manufacturing overhead - (Standard rate * Standard hours allowed) = $12,150 - ($3.50 * 4,980) = $1,260 Unfavorable

Therefore, the answer is C, $1,260 Unfavorable. 11ea7998_5d4c_6909_911b_8fe3d0e73fea_TB2627_00_TB2627_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