(Appendix 10A) Jessep Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. The company has provided the following data concerning its fixed manufacturing overhead costs in March:

-The fixed manufacturing overhead volume variance is:
A) $3,000 U
B) $3,000 F
C) $9,000 U
D) $6,000 U

Question

(Appendix 10A) Jessep Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. The company has provided the following data concerning its fixed manufacturing overhead costs in March:
 
-The fixed manufacturing overhead volume variance is:
A) $3,000 U 
B) $3,000 F 
C) $9,000 U 
D) $6,000 U

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $45,000 ÷ 15,000 hours = $3 per hour
Volume variance = Fixed component of the predetermined overhead rate x (Denominator hours - Standard hours allowed for the actual output)
= $3 per hour × (15,000 hours - 12,000 hours)
= $3 per hour × (3,000 hours)
= $9,000 U

(Appendix 10A) Jessep Corporation Has a Standard Cost System in Which