Asked by Siqian Chang on Jun 12, 2024
Verified
Rodarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours.In the most recent month, the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 6,480 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?
A) $240 Favorable
B) $144 Unfavorable
C) $240 Unfavorable
D) $96 Favorable
Fixed Manufacturing Overhead
Costs in the manufacturing process that do not vary with the volume of production, such as salaries of managers and depreciation of factory equipment.
Volume Variance
The difference between the expected volume of units produced or sold and the actual volume, affecting cost allocations in budgeting.
- Identify and comprehend the variances in budget and volume for fixed manufacturing overheads.
Verified Answer
NM
Nesha MarieJun 12, 2024
Final Answer :
B
Explanation :
Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process
= (6,600 machine-hours × $1.20 per machine-hour)- (6,480 machine-hours × $1.20 per machine-hour)
= $7,920 - $7,776
= $144 U
= (6,600 machine-hours × $1.20 per machine-hour)- (6,480 machine-hours × $1.20 per machine-hour)
= $7,920 - $7,776
= $144 U
Learning Objectives
- Identify and comprehend the variances in budget and volume for fixed manufacturing overheads.