Question

Budgeted amount: 0.5 machine hours per (MH) unit Variable overhead rate is $15 per MH Fixed overhead rate is $40 per MH Budgeted fixed overhead is $600,000 Actual amounts: Variable overhead incurred is $190,000 Fixed overhead incurred is $630,000 MH used is 11,000 Actual output is 20,000 units What is the Fixed Overhead Volume Variance

Answer 1

Fixed overhead volume variance = $200,000 Favorable

Step-by-step explanation:

The fixed overhead volume variance is the difference between the actual and budgeted production unit multiplied by the standard fixed production overhead cost per unit

Units

Budgeted units 15,000

Actual units 20,000

Variance 5,000

Fixed overhead rate per unit × $40

Fixed overhead volume variance $200,000