(Appendix 10A) A manufacturing company 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) $1,870 F
B) $1,928 F
C) $643 U
D) $2,570 F

Question

(Appendix 10A) A manufacturing company 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) $1,870 F 
B) $1,928 F 
C) $643 U 
D) $2,570 F

Quizplus · Accepted Answer

Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $47,545 ÷ 3,700 MHs = $12.85 per MH
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $47,545 - (3,850 MH × $12.85 per MH)
= $47,545 - $49,472.50
= $1,927.50 F

(Appendix 10A) a Manufacturing Company Has a Standard Costing System