Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: The company based its original budget on 5,100 machine-hours. The company actually worked 4,800 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 4,980 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?
A) $3,150 Unfavorable
B) $3,150 Favorable
C) $1,260 Unfavorable
D) $1,260 Favorable

Question

Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below:  The company based its original budget on 5,100 machine-hours. The company actually worked 4,800 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 4,980 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?
A) $3,150 Unfavorable 
B) $3,150 Favorable 
C) $1,260 Unfavorable 
D) $1,260 Favorable

Quizplus · Accepted Answer

11eacbfc_c7ec_2312_8ffe_97c1f8df2114_TB7552_00 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $53,550 ÷ 5,100 machine-hours = $10.50 per machine-hour
Volume variance = Budgeted fixed overhead cost − Fixed overhead applied to work in process
= $53,550 − (4,980 machine-hours × $10.50 per machine-hour)
= $53,550 − $52,290
= $1,260 U

Lossing Corporation Applies Manufacturing Overhead to Products on the Basis