Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Under absorption costing,the production-volume variance is:
A)$450
B)0
C)$1800
D)$1350

Question

Quizplus · Accepted Answer

The production-volume variance under absorption costing is calculated as the difference between the budgeted fixed manufacturing costs and the allocated fixed manufacturing costs based on actual production. The budgeted fixed manufacturing cost rate is $7200 / 800 units = $9 per unit. For 1000 units produced, the allocated fixed manufacturing costs are 1000 units * $9 = $9000. The variance is $9000 - $7200 = $1800.

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