Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below:
-Franklin's fixed manufacturing overhead volume variance for the year is:
A)$6,000 unfavorable
B)$19,000 favorable
C)$25,000 favorable
D)$55,000 unfavorable

Question

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below: 
-Franklin's fixed manufacturing overhead volume variance for the year is:
A)$6,000 unfavorable 
B)$19,000 favorable 
C)$25,000 favorable 
D)$55,000 unfavorable

Quizplus · Accepted Answer

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $600,000 - (198,000 units F1F1F1S1F1F1F10 2 hours per unit F1F1F1S1F1F1F10 $1.50 per hour)
= $600,000 - $594,000 = $6,000 U

Franklin Glass Works Uses a Standard Cost System in Which