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) $1,174 F
B) $1,194 F
C) $1,550 F
D) $357 U

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) $1,174 F 
B) $1,194 F 
C) $1,550 F 
D) $357 U

Quizplus · Accepted Answer

Fixed manufacturing overhead volume variance can be calculated as follows: 
Actual fixed overhead costs - Budgeted fixed overhead costs based on standard MHs allowed 
= $62,750 - [$65,000 ÷ (9,500 MHs ÷ 200 MHs per unit)] 
= $62,750 - $63,944 
= $1,194 F (favorable variance)

A Manufacturing Company Uses a Standard Costing System in Which