Question

mint company applies fixed overhead at the rate of $1.50 per unit. for may, budgeted fixed overhead was $604,500. the production volume variance amounted to $4,500 unfavorable, and the price variance was $15,000 favorable. required: a. what was the budgeted volume in units for may? b. what was the actual volume of units produced in may? c. what was the actual fixed overhead incurred for may?

Answer 1

The budgeted volume in units for May was 403,000 units, the actual volume produced was 400,000 units, and the actual fixed overhead incurred for May was $589,500.

Step-by-step explanation:

The question pertains to calculating budgeted and actual volumes and overhead costs for a company. The Mint Company applies fixed overhead at the rate of $1.50 per unit. Given budgeted fixed overhead of $604,500 and a production volume variance of $4,500 unfavorable, we can determine the budgeted volume in units. To do this, we divide the budgeted overhead by the fixed overhead rate ($604,500 / $1.50), resulting in 403,000 units.

To find the actual volume produced in May, we use the production volume variance. Since the variance is unfavorable, it means that the actual volume is less than the budgeted volume. We calculate the difference in units by dividing the variance by the fixed overhead rate ($4,500 / $1.50), which is 3,000 units. Subtracted from the budgeted volume, the actual volume produced is 400,000 units (403,000 - 3,000).

Finally, to determine the actual fixed overhead incurred for May, we consider the price variance. Because it is favorable, it means the actual costs were less than budgeted. To calculate the actual fixed overhead, we subtract the price variance from the budgeted overhead ($604,500 - $15,000), leading to an actual fixed overhead of $589,500.