QUESTION 3 5 po Channel One Industries uses a standard costing system to apply m

Question

QUESTION 3 5 po Channel One Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Channel One anticipated producing 2,450 units with fixed manufacturing overhead costs allocated at $7 40 per direct labor hour with a standard of 1.5 direct labor hours per unit. In May, actual production was 3,200 units and actual fixed manufacturing overhead costs were $23,000 What was Channel One's fixed manufacturing overhead volume variance in May? $4,195 favorable $4.195 unfavorable O $8,325 favorable $8,325 unfavorable

Explanation / Answer

Answer : ($4195) favourable.

Fixed manufacturing overhead volume variance = actual fixed overhead cost - budgeted fixed overhead cost

= $23000 - ($7.40 * 1.5 * 2450 units)

= $23000 - $27195

= ($4195) favourable.

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