A furniture manufacturer 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)$2,720 U
B)$1,225 F
C)$2,811 U
D)$3,945 U

Question

A furniture manufacturer 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)$2,720 U 
B)$1,225 F 
C)$2,811 U 
D)$3,945 U

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $40,425 ÷ 3,300 hours = $12.25 per hour
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $40,425 - (3,078 hours × $12.25 per hour)
= $40,425 - $37,705.50
= $2,719.50 U

A Furniture Manufacturer Uses a Standard Costing System in Which