Lihue, Inc., applies fixed overhead at the rate of $3.10 per unit. Budgeted fixe

Question

Lihue, Inc., applies fixed overhead at the rate of $3.10 per unit. Budgeted fixed overhead was $1,093,370. This month 343,200 units were produced, and actual overhead was $1,070,000. Required a. What are the fixed overhead price and production volume variances for Lihue? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option) Fixed overhead price variance Fixed overhead production volume variance b. What was budgeted production for the month? (Do not round intermediate calculations.) Budgeted production units

Explanation / Answer

a. Actual costs = $1,070,000

Budget = $1,093,370

Applied = $3.10 × 343,200 = $1,063,920

Fixed overhead price variance = $1,070,000 ? $1,093,370 = $23,370 F

Fixed overhead production volume variance = $1,093,370 ? $1,063,920 = $29,450 U

Total fixed overhead variance = $23,370 F ? $29,450 U = $6,080 U

b. Budgeted production is 9,500 units (= $29,450 ÷ $3.10) greater than actual production. (It is morethan actual production, because the production volume variance is unfavorable.) Therefore,budgeted production volume is 352,700 units (= 343,200 + 9,500).

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.