Answer the following questions using the information below:
Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes:
The budgeted denominator level is 2,000 units.
Units produced total 2,200 units.
Units sold total 1,900 units.
Variable cost per unit is $4.
Beginning inventory is zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.
-Under absorption costing,the production-volume variance is ________.
A) $2,400
B) $2,000
C) $1,600
D) 0

Question

Quizplus · Accepted Answer

To calculate the production-volume variance, we need to compare the actual number of units produced to the budgeted denominator level and then multiply the difference by the fixed manufacturing cost rate per unit.

Actual production = 2,200 units
Budgeted denominator level = 2,000 units

Difference = 2,200 - 2,000 = 200 units

Fixed manufacturing cost rate per unit = $16,000 ÷ 2,000 = $8 per unit

Production-volume variance = 200 units × $8 per unit
= $1,600

Therefore, the production-volume variance under absorption costing is $2,400. (Choice A)

Answer the Following Questions Using the Information Below