Plimpton company produces countertop ovens. Plimpton uses a standard costing system. the standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that 3 direct labor hours should be used for every single oven produced. The annual budgeted production volume is usually 8000 units per year. the budgeted overhead costs for the coming year are determined as follows: Fixed overhead: $120,000 Variable overhead: 96,000 Plimpton applies overhead on the basis of direct labor hours. During the year Plimpton produced 9000 units worked 26500 direct labor hours and incurred total $237,000 of overhead costs of which $107,000 is variable overhead. What are the fixed overhead budget variance and volume variance?
Plimpton company produces countertop ovens. Plimpton uses a standard costing system. the standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that 3 direct labor hours should be used for every single oven produced. The annual budgeted production volume is usually 8000 units per year. the budgeted overhead costs for the coming year are determined as follows: Fixed overhead: $120,000 Variable overhead: 96,000 Plimpton applies overhead on the basis of direct labor hours. During the year Plimpton produced 9000 units worked 26500 direct labor hours and incurred total $237,000 of overhead costs of which $107,000 is variable overhead. What are the fixed overhead budget variance and volume variance?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Plimpton company produces
countertop ovens. Plimpton uses a
standard costing system. the standard
costing system relies on direct labor
hours to assign overhead costs to
production. The direct labor standard
indicates that 3 direct labor hours
should be used for every single oven
produced. The annual budgeted
production volume is usually 8000
units per year. the budgeted overhead
costs for the coming year are
determined as follows:
Fixed overhead: $120,000
Variable overhead: 96,000
Plimpton applies overhead on the
basis of direct labor hours. During the
year Plimpton produced 9000 units
worked 26500 direct labor hours and
incurred total $237,000 of overhead
costs of which $107,000 is variable
overhead.
What are the fixed overhead budget
variance and volume variance?
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