A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The fixed manufacturing overhead volume variance for the period is closest to:
A)$1,359 U
B)$2,550 F
C)$3,902 U
D)$1,352 U

Question

A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:  The fixed manufacturing overhead volume variance for the period is closest to:
A)$1,359 U 
B)$2,550 F 
C)$3,902 U 
D)$1,352 U

Quizplus · Accepted Answer

Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $77,775 ÷ 6,100 MHs = $12.75 per MH
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $77,775 - (5,994 MH × $12.75 per MH)
= $77,775 - $76,423.50
= $1,351.50 U

A Manufacturing Company Uses a Standard Costing System in Which