Company uses a standand coaing system and applics its fhued manufacturing overth

Question

Company uses a standand coaing system and applics its fhued manufacturing overthc a t products using a fixed pre-determined overhcad rate (FPOHR) basd on direct labor hours (DLHs) and a stamdard of production for the period manufacturing overhcad (FMOII) costs to Budgcted (Denominator) Activity 240,000 DLHs 225,000 DLHs 117,000 units Actual DLHs Actual production Actual FMOH Over-applied FMOH 5 881,250 54.750 The FMOH Volume Variance for the period was closest to: A S 21,192 Unfavorable B s21,192 Favorable C. s24,000 Unfavorable D. S24,000 Favorable E. None of the above

Explanation / Answer

Answer is E. None of above.

Explanation:

Actual OH Incurred: 881250 Add: Over-applied Oh 54750 OH applied 936000 Number of actual hours 225000 DLH OH rate er DLH 4.16 Std hours for actual output (117000*2): 234,000 hours Std Fixed OH for actual output (234000*4.16) 973440 Budgeted Fixed OH (240000*4.16) 998400 Fixed OH volume Variance= Std Oh for actual Output-Budgeted Fixed OH ($ 973,440 - $998,400) = $24,960 Unfavorable

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