Boulder Corporation uses a standard costing system. The following factory overhead and production data were reported in September: Standard fixed overhead allocation rate per direct labour hour $2
Estimated monthly direct labour hours 40,000
Standard direct labour hours for actual output in September 42,000
The fixed overhead production volume variance is:
A)$4,000 overapplied
B)$4,000 underapplied
C)$80,000
D)$84,000

Question

Quizplus · Accepted Answer

Fixed overhead production volume variance = (Standard fixed overhead allocation rate per direct labour hour * Estimated monthly direct labour hours) - (Standard fixed overhead allocation rate per direct labour hour * Standard direct labour hours for actual output in September)= ($2 * 40,000) - ($2 * 42,000)= $80,000 - $84,000= $4,000 underapplied

Boulder Corporation Uses a Standard Costing System