Asked by Giavanna Battaglia on May 13, 2024
Verified
At the beginning of last year, Monze Corporation budgeted $600,000 of fixed manufacturing overhead and chose a denominator level of activity of 100,000 direct labor-hours.At the end of the year, Monze's fixed manufacturing overhead budget variance was $8,000 unfavorable.Its fixed manufacturing overhead volume variance was $21,000 favorable.Actual direct labor-hours for the year were 96,000.What was Monze's actual fixed manufacturing overhead for last year?
A) $563,000
B) $579,000
C) $608,000
D) $592,000
Fixed Manufacturing Overhead
Consists of manufacturing costs that do not change with the level of production, such as salaries of supervisors and rent for factory premises.
Denominator Level
The level of activity used to compute the fixed manufacturing overhead rate in absorption costing, affecting inventory and cost of goods sold.
Budget Variance
The difference between budgeted amounts and actual amounts spent or received.
- Comprehend the fundamental concepts of variance analysis in manufacturing overhead.
- Examine how real activity levels compare with the anticipated levels in the budget concerning manufacturing overhead.
Verified Answer
$8,000 U = Actual fixed overhead - $600,000
$8,000 = Actual fixed overhead - $600,000
Actual fixed overhead = $8,000 + $600,000
Actual fixed overhead = $608,000
Learning Objectives
- Comprehend the fundamental concepts of variance analysis in manufacturing overhead.
- Examine how real activity levels compare with the anticipated levels in the budget concerning manufacturing overhead.
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