Gina Production Company uses a standard costing system. The following information pertains to 2009:

Actual factory overhead costs ($16,500 is fixed) $40,125
Actual direct labor costs (11,250 hours) $131,625
Standard direct labor for 5,500 units:  
     Standard hours allowed 11,000 hours
     Labor rate $12.00

The factory overhead rate is based on an activity level of 10,000 units. Standard cost data for 5,000 units is as follows:

Variable factory overhead $22,500
Fixed factory overhead  13,500
Total factory overhead $36,000

What is the fixed overhead volume variance for Gina Production Company?

a. $1,350 (F)
b. $3,600 (F)
c. $4,125 (U)
d. $1,350 (U)

ANS:  A

CALCULATIONS:

$13,500 – (11,000 ´ (13,500/10,000)) = $1,350 (F)

PTS:   1                    OBJ:   9-4

Fixed manufacturing overhead was budgeted at $105,000, and 25,000 direct labor hours were budgeted. If the fixed overhead volume variance was $4,000 unfavorable and the fixed overhead spending variance was $1,500 favorable, fixed manufacturing overhead applied must be

a. $109,000.
b. $106,500.
c. $106,500.
d. $101,000.

ANS:  D

CALCULATIONS:

$105,000 – $4,000 = $101,000

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