Venus Corporation incurred fixed manufacturing costs of $6,600 during 2017.Other information for 2017 includes:
The budgeted denominator level is 1,600 units.
Units produced total 770 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
The production-volume variance totals ________.
A)$1,457
B)$701
C)$3,424
D)0

Question

Venus Corporation incurred fixed manufacturing costs of $6,600 during 2017.Other information for 2017 includes:
The budgeted denominator level is 1,600 units. 
Units produced total 770 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
The production-volume variance totals ________.
A)$1,457
B)$701
C)$3,424
D)0

Quizplus · Accepted Answer

The production-volume variance is calculated as the difference between the budgeted fixed manufacturing cost and the actual fixed manufacturing cost. The budgeted fixed manufacturing cost is based on the budgeted denominator level, which is 1,600 units. The actual fixed manufacturing cost is $6,600. Therefore, the production-volume variance is $6,600 - (1,600 units x $6,600 / 1,600 units) = $0.

Venus Corporation Incurred Fixed Manufacturing Costs of $6,600 During 2017