Shiplett Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,800 machine-hours. The budgeted fixed manufacturing overhead costs are $317,680. In March, the actual fixed manufacturing overhead costs were $314,300 and the standard machine-hours allowed for the actual output were 8,500 machine-hours.
Required:
a. Compute the budget variance for March. Show your work!
b. Compute the volume variance for March. Show your work!

Question

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The Answer of Shiplett Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,800 machine-hours. The budgeted fixed manufacturing overhead costs are $317,680. In March, the actual fixed manufacturing overhead costs were $314,300 and the standard machine-hours allowed for the actual output were 8,500 machine-hours.
Required:
a. Compute the budget variance for March. Show your work!
b. Compute the volume variance for March. Show your work!

Shiplett Corporation Applies Overhead to Products Based on Machine-Hours