Question

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products:
Standard fixed overhead per direct labor hour $3​
Standard direct labor hours per unit 0.75​
Budgeted production 3100​
Budgeted fixed overhead costs $6975.00​ ​ ​
Actual production in units 3900​
Actual fixed overhead costs incurred $2200.00​
Required:
1. What is Perry's fixed manufacturing overhead volume variance?

Answer 1

Answer:

Volume variance= $1,800 unfavorable

Explanation:

Giving the following information:

Standard fixed overhead per direct labor hour $3​

Standard direct labor hours per unit 0.75​

Budgeted production 3100​

Budgeted fixed overhead costs $6975.00​ ​ ​

Actual production in units 3900​

Actual fixed overhead costs incurred $2200.00​

To calculate the fixed overhead volume variance, we need to use the following formula:

Volume variance= budgeted fixed overhead - fixed overhead applied

Volume variance= 6,975 - [3*(3,900*0.75)]

Volume variance= 6,975 - 8,775= $1,800 unfavorable