Question

Carlson Fashions uses standard costs for Its manufacturing division. From the following data, calculate the fixed overhead volume variance.

-Actual fixed overhead $40,000
-Budgeted fixed overhead $21,000
-Standard overhead allocation rate $6
-Standard direct labor hours per unit 4 DLHr
-Actual output 2,10

Answer 1

$29,400 favorable

Step-by-step explanation:

The formula to compute the fixed overhead volume variance is shown below:

= Budgeted fixed overhead - standard fixed overhead cost allocated to production

where,

Standard fixed overhead cost allocated to production is

= 2,100 × $6 × 4

= 50,400

So, the fixed overhead volume variance is

= $21,000 - $50,400

= $29,400 favorable

We assume the actual output is 2,100 instead of 2,10