The Gathering Sound, Inc. collected the following data regarding production of one of its products. Budgeted units 20,000 units Standard direct labor hours per unit of output 3.0 DL hours per unit Predetermined variable factory overhead rate $1.90 Per DL hour Predetermined fixed factory overhead rate $4.50 Per DL hour Actual finished units produced 21,000 units Actual direct labor hours 58,000 hrs. Actual variable overhead costs incurred $ 101,500 Actual fixed overhead costs incurred $ 262,160 Compute the fixed overhead volume variance. a. $21,340F b. $13,500U c. $7,840F d. $21,340U e. $13,500F
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Gathering Sound, Inc. collected the following data regarding production of one of its products.
|
|
|
|
|
|
|
Budgeted units |
|
20,000 |
|
units |
|
Standard direct labor hours per unit of output |
|
3.0 |
|
DL hours per unit |
|
Predetermined variable factory |
|
$1.90 |
|
Per DL hour |
|
Predetermined fixed factory overhead rate |
|
$4.50 |
|
Per DL hour |
|
Actual finished units produced |
|
21,000 |
|
units |
|
Actual direct labor hours |
|
58,000 |
|
hrs. |
|
Actual variable overhead costs incurred |
$ |
101,500 |
|
|
|
Actual fixed overhead costs incurred |
$ |
262,160 |
|
|
Compute the fixed overhead volume variance.
| a. |
$21,340F |
|
| b. |
$13,500U |
|
| c. |
$7,840F |
|
| d. |
$21,340U |
|
| e. |
$13,500F |
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