Mattern Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below:
The company based its original budget on 6,100 machine-hours. The company actually worked 5,710 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?
A) $4,836 unfavorable
B) $4,836 favorable
C) $6,944 unfavorable
D) $6,944 favorable

Question

Mattern Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: 
The company based its original budget on 6,100 machine-hours. The company actually worked 5,710 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?
A) $4,836 unfavorable 
B) $4,836 favorable 
C) $6,944 unfavorable 
D) $6,944 favorable

Quizplus · Accepted Answer

Fixed manufacturing overhead volume variance = Budgeted fixed overhead – (Standard machine hours allowed x Fixed overhead rate)
 
Budgeted fixed overhead = $102,000
Standard machine hours allowed = 5,540
Fixed overhead rate = Budgeted fixed overhead / Budgeted machine hours
= $102,000 / 6,100 machine-hours
= $16.72 per machine-hour
 
Fixed manufacturing overhead volume variance = $102,000 – (5,540 x $16.72)
= $102,000 – $92,616.80
= $9,383.20 unfavorable
 
Therefore, the overall fixed manufacturing overhead volume variance for the month was $6,944 unfavorable.

Mattern Corporation Applies Manufacturing Overhead to Products on the Basis