A company has recorded the following variances in its accounting records which a

Question

A company has recorded the following variances in its accounting records which are maintained on a standard cost basis. The variances are considered to be significant by management and are to be disposed of accordingly VARIANCES CALCULATED AND ENTERED INTO ACCOUNTING RECORDS Direct Materials Price Variance 5,000 Direct Materials Quantity Variance 12,000 U Direct Labor Rate Variance 15,000 U Direct Labor Efficiency Variance 8,000 U Variable Manufacturing Overhead Spending Variance 6,000 F Variable Manufacturing Overhead Efficiency Variance 4,000 U Fixed Manufacturing Overhead Spending Variance 5,000 U Fixed Manufacturing Overhead Volume Variance 2,000 U

Explanation / Answer

Answer:-If the company applied $225000 of fixed manufacturing overhead to production during the period, then fixed mabufacturing overhead will be budgeted for the period=$223000 (Part b).

Explanation:- The fixed overhead production volume variance is the difference between the budgeted and applied fixed overhead costs.

Fixed manufacturing overhead volume variance:-=Budgeted costs - Applied costs

2000 U = Budgeted costs - $225000

Budgeted costs = $225000-$2000

=$223000

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