Hoag Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: The company based its original budget on 2,600 machine-hours.The company actually worked 2,280 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 2,080 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?

A) $4,352 Favorable
B) $4,352 Unfavorable
C) $7,072 Unfavorable
D) $7,072 Favorable

Question

Hoag Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below:

The company based its original budget on 2,600 machine-hours.The company actually worked 2,280 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 2,080 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?

A) $4,352 Favorable
B) $4,352 Unfavorable
C) $7,072 Unfavorable
D) $7,072 Favorable

Jaskaran Malhi · Accepted Answer

Final Answer : C, Explanation :  Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in processFixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $35,360 ÷ 2,600 machine-hours = $13.60 per machine-hour= $35,360 - (2,080 machine-hours × $13.60 per machine-hour)= $35,360 - $28,288= $7,072 U

Definitions

Learning Objectives

Learning Objectives

Related questions