A manufacturer of playground equipment 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)$2,256 F
B)$2,331 F
C)$3,089 U
D)$5,420 F

Question

A manufacturer of playground equipment 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)$2,256 F 
B)$2,331 F 
C)$3,089 U 
D)$5,420 F

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $40,650 ÷ 3,000 MHs = $13.55 per MH
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $40,650 - (3,172 MHs × $13.55 per MH)
= $40,650 - $42,980.60
= $2,330.60 F

A Manufacturer of Playground Equipment Uses a Standard Costing System