(Appendix 11A)Denby Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: The company based its original budget on 6, 400 machine-hours.The company actually worked 6, 710 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6, 540 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A)$3, 286 Favorable
B)$1, 484 Unfavorable
C)$3, 286 Unfavorable
D)$1, 484 Favorable

Question

(Appendix 11A)Denby Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below:  The company based its original budget on 6, 400 machine-hours.The company actually worked 6, 710 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6, 540 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A)$3, 286 Favorable 
B)$1, 484 Unfavorable 
C)$3, 286 Unfavorable 
D)$1, 484 Favorable

Quizplus · Accepted Answer

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $67, 840 ÷ 6, 400 machine-hours = $10.60 per machine-hour
= $67, 840 - (6, 540 machine-hours × $10.60 per machine-hour)
= $67, 840 - $69, 324
= $1, 484 F

(Appendix 11A)Denby Corporation Applies Manufacturing Overhead to Products on the Basis