The standard costs and actual costs for factory overhead for the manufacture of 2,900units of actual production are as follows:Standard CostsLine Item DescriptionValueFixed overhead (based on 10,000 hours)3 hours per unit at $0.71 per hourVariable overhead3 hours per unit at $1.96 per hourActual CostsTotal variable cost, $18,100Total fixed cost, $8,200The fixed factory overhead volume variance isa. $738 favorableb. $0c. $738 unfavorabled. $923 unfavorable

The objective of the question is to calculate the fixed factory overhead volume variance. The fixed…

Answered: The standard costs and actual costs for…

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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The standard costs and actual costs for factory overhead for the manufacture of 2,900units of actual production are as follows:

Standard Costs

Line Item Description	Value
Fixed overhead (based on 10,000 hours)	3 hours per unit at $0.71 per hour
Variable overhead	3 hours per unit at $1.96 per hour

Actual Costs
Total variable cost, $18,100
Total fixed cost, $8,200

The fixed factory overhead volume variance is

a. $738 favorable

b. $0

c. $738 unfavorable

d. $923 unfavorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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