A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as 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) $2,213 F
B) $2,113 F
C) $3,045 F
D) $832 U

Question

A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as 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) $2,213 F 
B) $2,113 F 
C) $3,045 F 
D) $832 U

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $58,870 ÷ 5,800 MHs = $10.15 per MH
Volume variance = Budgeted fixed overhead cost − Fixed overhead applied to work in process
= $58,870 − (6,018 MHs × $10.15 per MH)
= $58,870 − $61,082.70
= $2,212.70 F

A Manufacturer of Playground Equipment Has a Standard Costing System