Rising,Inc.,uses the following standard to produce a single unit of its product:
Overhead (2 hrs.@ $3/hr.)= $6
The flexible budget for overhead is $100,000 plus $1 per direct labor hour.Actual data for the month show overhead costs of $150,000 based on 24,000 units of production.The overhead volume variance is:
A) $10,000 favorable
B) $12,000 favorable
C) $4,000 unfavorable
D) $16,000 unfavorable
E) $36,000 unfavorable

Question

Quizplus · Accepted Answer

Budgeted overhead = $100,000 + (2 x 24,000 units x $1) = $148,000
Applied overhead = $6 x 24,000 = $144,000
Overhead volume variance = $148,000 - $144,000 = $4,000 unfavorable