A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
The fixed manufacturing overhead volume variance for the period is closest to:
A) $1,240 U
B) $496 F
C) $1,736 F
D) $516 F

Question

A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:
 The fixed manufacturing overhead volume variance for the period is closest to:
A) $1,240 U 
B) $496 F 
C) $1,736 F 
D) $516 F

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $17,360 ÷ 1,400 hours = $12.40 per hour
Volume variance = Budgeted fixed overhead cost − Fixed overhead applied to work in process
= $17,360 − (1,440 hours × $12.40 per hour)
= $17,360 − $17,856
= $496 F

A Furniture Manufacturer Uses a Standard Costing System in Which