Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 34

Fixed Cost Variances

Hilo Corporation applies fixed overhead at the rate of $3.30 per unit. Budgeted fixed overhead was $407,160. This month 128,000 units were produced, and actual overhead was $390,660.

Required

What are the fixed overhead price and production volume variances for Hilo?

Step 1 of 2

a.

Formula to calculate fixed overhead price variance

Calculation of fixed overhead price variances

Thus, fixed overhead price variance is $16,500 U.