# Fixed Overhead Volume Variance Calculation## Standard Costing System OverviewA company uses a standard costing system and applies overhead to production based on direct labor-hours. Below is an excerpt from the standard cost card for its only product:### Fixed Manufacturing Overhead- **Standard Hours:** 2 hours- **Fixed Predetermined Overhead Rate:** $6.00 per hour- **Standard Cost:** $12.00## Additional Information During the Recent Period- **Total Actual Fixed Overhead Cost:** $275,000- **Budgeted Amount of Fixed Overhead Cost:** $285,000- **Direct Labor-Hours Used:** 46,000 hours for producing 24,060 units### Question: How much was the fixed overhead volume variance?### Multiple Choice Options- $3,720 F- $13,720 FTo calculate the fixed overhead volume variance, use the formula:\[\text{Fixed Overhead Volume Variance} = \left(\text{Budgeted Fixed Overhead} - \text{Applied Fixed Overhead}\right)\]Where:\[\text{Applied Fixed Overhead} = \text{Standard Hours} \times \text{Actual Units Produced} \times \text{Fixed Overhead Rate}\]Analyze and calculate to determine the correct variance from the given options. **Transcription for Educational Website****Given Data:**- The total actual fixed overhead cost was $275,000.- The budgeted amount of fixed overhead cost was $285,000.- 46,000 direct labor-hours were actually used to produce 24,060 units.**Question:**How much was the fixed overhead volume variance?**Options:**- Multiple Choice: - ○ $3,720 F - ○ $13,720 F - ○ $3,720 U - ○ $13,720 U**Explanation:** In the context of overhead variances, "F" indicates a favorable variance and "U" indicates an unfavorable variance. The fixed overhead volume variance is calculated by comparing the budgeted fixed overhead with the actual fixed overhead.

Name: # Fixed Overhead Volume Variance Calculation## Standard Costing Syste
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Description: # Fixed Overhead Volume Variance Calculation## Standard Costing System OverviewA company uses a standard costing system and applies overhead to production based on direct labor-hours. Below is an excerpt from the standard cost card for its only prod

Standard costing means where standard is set for various cost element and actual cost is then compared with standard and deviations are calculated. Standard fixed overhead per unit = $ 12 Budgeted amount of fixed overhead = $ 285000 Budgeted volume of output = 285000/12 = 23,750 units Actual volume of output = 24,060 Fixed overhead volume variance = (Actual output – Budgeted output)*Standard fixed overhead per unit Fixed overhead volume variance = (24060-23750)*12 Fixed overhead volume variance = $ 3,720 Since the output has increased as compared to budgeted , hence the variance is FAVOURABLE. Hence , the right answer is OPTION A , $ 3,720 F.

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A company uses a standard costing system and applies overhead to production based on direct labor-hours. It provided the following excerpt from standard cost card of its only product: Fixed Pre- determined Standard Hours Overhead Rate Standard Cost Fixed manufacturing overhead 2 hours $6.00 per hour $12.00 During the most recent period, the following additional information was available: • The total actual fixed overhead cost was $275,000. • The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,060 units. How much was the fixed overhead volume variance? Multiple Choice $3,720 F $13,720 F

A company uses a standard costing system and applies overhead to production based on direct labor-hours. It provided the following excerpt from standard cost card of its only product: Fixed Pre- determined Standard Hours Overhead Rate Standard Cost Fixed manufacturing overhead 2 hours $6.00 per hour $12.00 During the most recent period, the following additional information was available: • The total actual fixed overhead cost was $275,000. • The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,060 units. How much was the fixed overhead volume variance? Multiple Choice $3,720 F $13,720 F

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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