(Appendix 11A)Homer Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.The company has provided the following data concerning its manufacturing overhead costs for last year: The volume variance was:
A)$200 F
B)$400 U
C)$300 F
D)$240 U

Question

(Appendix 11A)Homer Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.The company has provided the following data concerning its manufacturing overhead costs for last year:  The volume variance was:
A)$200 F 
B)$400 U 
C)$300 F 
D)$240 U

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $4, 000 ÷ 1, 000 hours = $4 per hour
Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output)
= $4 per hour × (1, 000 hours - 900 hours)
= $4 per hour × (100 hours)
= $400 U

(Appendix 11A)Homer Corporation Has a Standard Cost System in Which