Question

Manufacturing builds playground equipment that it sells to elementary schools and municipalities. Schengen's management has contracted you to perform a variance analysis on the fixed manufacturing overhead for its line of slides. Schengen's cost accounting team informs you that it allocates fixed overhead based on machine hours. This period production was budgeted at 375 slides. Budgeted and actual production data follows:
Standard fixed overhead cost per machine hour $11
Standard machine hours per slide 6
Actual production 395
Actual fixed overhead cost $27,50
What is the fixed manufacturing overhead volume variance in this​ period?
A. $18,425 unfavorable.
B. $15,975 unfavorable.
C. $15,975 favorable.
D. $18,425 favorable.

Answer 1

Answer:

Volume variance    $1,320  Favorable

Explanation:

The fixed overhead volume variance is the difference between the actual and budgeted production unit multiplied by the standard fixed production overhead cost per unit.

Standard fixed overhead cost per unit = $11×6 =  116

                                                                                             Units

Budgeted     units                                                               375

Actual            units                                                              395

Volume variance                                                                  20

Standard fixed overhead cost                                        × $66

Volume variance                                                                $1,320   Favorable