Cholla Company\'s standard fixed overhead rate is based on budgeted fixed manufa

Question

Cholla Company's standard fixed overhead rate is based on budgeted fixed manufacturing overhead of $31,800 and budgeted production of 30,000 units. Actual results for the month of October reveal that Cholla produced 28,000 units and spent $29,950 on fixed manufacturing overhead costs. Calculate Cholla's fixed overhead rate and the fixed overhead volume variance. (Round "Fixed Overhead Rate" to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Answer is complete but not entirely correct. 10.60 per Uni Fixed Overhead Rate ixed Overhead Volume Variance 21200 8

Explanation / Answer

Fixed overhead rate = 31800/30000 = 1.06 per unit

Fixed overhead volume variance = (30000-28000)*1.06 = 2120 U

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