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:
-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?
A)$2,565 F
B)$2,810 F
C)$225 U
D)$2,585 F

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: 
-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?
A)$2,565 F 
B)$2,810 F 
C)$225 U 
D)$2,585 F

Quizplus · Accepted Answer

Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost F1F1F1S1F1F1F10 Estimated total amount of the allocation base = $95,540 F1F1F1S1F1F1F10 6,800 MHs = $14.05 per MH
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= $95,540 - (6,984 MH F1F1F1S1F1F1F10 $14.05 per MH)
= $95,540 - $98,125 = $2,585 F

A Manufacturing Company Uses a Standard Costing System in Which