The Gidget Company produces a variety of styles of gidgets, and measures total output as the standard hours allowed foractual output. Gidget Company's manufacturing overhead budget calls for $50,000 of fixed overhead for the year plus $10per direct labor hour.Last year the Gidget Company produced 11,000 standard hours of output. Actual manufacturing overhead for the yearamounted to $53,000 of fixed overhead and the Gidget Company used 8,000 direct labor hours. The Gidget Company usesstandard direct labor hours allowed as a basis for allocating overhead and uses 10,000 direct labor hours as its denominatorvolume.Calculate the production volume variance:

The production volume variance is a variance that measures the difference between the actual…

Answered: Calculate the production volume…

Business

Accounting

Calculate the production volume variance:

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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Question

The Gidget Company produces a variety of styles of gidgets, and measures total output as the standard hours allowed for
actual output. Gidget Company's manufacturing overhead budget calls for $50,000 of fixed overhead for the year plus $10
per direct labor hour.
Last year the Gidget Company produced 11,000 standard hours of output. Actual manufacturing overhead for the year
amounted to $53,000 of fixed overhead and the Gidget Company used 8,000 direct labor hours. The Gidget Company uses
standard direct labor hours allowed as a basis for allocating overhead and uses 10,000 direct labor hours as its denominator
volume.
Calculate the production volume variance:

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