The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The fixed manufacturing overhead volume variance for March is:
A)$7,750 F
B)$7,750 U
C)$1,550 F
D)$3,900 U

Question

The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March:  The fixed manufacturing overhead volume variance for March is:
A)$7,750 F 
B)$7,750 U 
C)$1,550 F 
D)$3,900 U

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $77,000 ÷ 154,000 hours = $0.50 per hour
Standard hours allowed for the actual output = 5.00 hours per unit × 33,900 units = 169,500 hours
Fixed overhead applied to work in process = $0.50 per hour × 169,500 hours = $84,750
Volume variance = Budgeted fixed overhead - Fixed overhead applied to work in process
= $77,000 - $84,750
= $7,750 F

The Dillon Corporation Makes and Sells a Single Product