Jay Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The information below pertains to a recent month's activity: The volume variance would be:
A)$300 F
B)$300 U
C)$150 F
D)$180 F

Question

Jay Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The information below pertains to a recent month's activity:  The volume variance would be:
A)$300 F 
B)$300 U 
C)$150 F 
D)$180 F

Quizplus · Accepted Answer

Volume variance = Fixed component of the predetermined overhead rate F1F1F1S1F1F1F10 (Denominator hours -Standard hours allowed)
= $3 per DLH (300 DLHs - 360 DLHs)= $3 per DLH (-60 DLHs)= $180 F

Jay Company Uses a Standard Cost System in Which It