The Violet Company established a master budget volume of 30,000 units for September. Actual overhead costs incurred amounted to $84,500 and included variable overhead of $56,000 and fixed overhead of $28,500. Actual production for the month was 32,000 units. The standard variable overhead rate was $2 per direct labour hour. The standard fixed overhead rate was $1 per direct labour hour. One direct labour hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labour hours.
Required:
1. Compute the total manufacturing overhead cost variance.
2. Compute the variable overhead flexible budget variance.
3. Compute the fixed overhead budget variance.
4. Compute the production volume variance.

Question

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The Answer of The Violet Company established a master budget volume of 30,000 units for September. Actual overhead costs incurred amounted to $84,500 and included variable overhead of $56,000 and fixed overhead of $28,500. Actual production for the month was 32,000 units. The standard variable overhead rate was $2 per direct labour hour. The standard fixed overhead rate was $1 per direct labour hour. One direct labour hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labour hours.
Required:
1. Compute the total manufacturing overhead cost variance.
2. Compute the variable overhead flexible budget variance.
3. Compute the fixed overhead budget variance.
4. Compute the production volume variance.

The Violet Company Established a Master Budget Volume of 30,000