Patton Corp. uses a standard cost system to account for the costs of its one products. Budgeted fixed overhead is $75,000, budgeted production is 2,500 per month, and practical capacity is 3,000 units. During November, Patton produced 2,400 units. Fixed overhead incurred totaled $70,310.
Assume Patton calculates its fixed overhead rate based on budgeted production.
a. What is the fixed overhead rate?
b. What is the fixed overhead volume variance?
c. By how much was fixed overhead over- or underapplied?
Now assume Patton calculates its fixed overhead rate based on practical capacity.
d. What is the fixed overhead rate?
e. What is the expected (planned) capacity variance?
f. What is the unexpected (unplanned) capacity variance?
g. By how much was fixed overhead over- or under-applied?

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The Answer of Patton Corp. uses a standard cost system to account for the costs of its one products. Budgeted fixed overhead is $75,000, budgeted production is 2,500 per month, and practical capacity is 3,000 units. During November, Patton produced 2,400 units. Fixed overhead incurred totaled $70,310.
Assume Patton calculates its fixed overhead rate based on budgeted production.
a. What is the fixed overhead rate?
b. What is the fixed overhead volume variance?
c. By how much was fixed overhead over- or underapplied?
Now assume Patton calculates its fixed overhead rate based on practical capacity.
d. What is the fixed overhead rate?
e. What is the expected (planned) capacity variance?
f. What is the unexpected (unplanned) capacity variance?
g. By how much was fixed overhead over- or under-applied?