Comprehensive Final Exam: Part 1 (Problems) i Saved Help Save & Exit Submit Holl

Question

Comprehensive Final Exam: Part 1 (Problems) i Saved Help Save & Exit Submit Holl Corporation has provided the following data for November. 5.800 Machine- hours $ 74,240 Denominator level of activity Budgeted fixed manufacturing overhead costs Standard machine-hours allowed for the actual output Actual fixed manufacturing overhead costs 6,100 machine- hours $73,080 Required: a. Compute the budget variance for November. b. Compute the volume variance for November. (Input all amounts as positive values.) a. Budget variance b. Volume variance

Explanation / Answer

To calculate the different variances, we first need to calculate the standard fixed overhead absorption rate as follows:

Standard Fixed Overhead Absorption Rate

= Budgeted Overhead Cost/Budgeted level of activity

= $74,240/5,800 machine-hours

=$12.80 per machine-hour

1. Budget Variance for November:

= Actual Overhead Cost - (Actual machine-hours * Standard Absorption Rate)

= $73,080 - (6,100 * $12.80)

= $73,080 - $78,080

= $5,000 (Favorable)

2. Volume Variance for November:

=(Actual - Budgeted machine-hours) *  Budgeted Fixed Overhead Absorption Rate

= (6100 - 5800) * $12.80

= $ 3,840 (Unfavorable)

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