Question

The following data is given for the Bahia Company: Budgeted production (at 100% of normal capacity) 1,074 units Actual production 971 units Materials: Standard price per pound $1.88 Standard pounds per completed unit 12 Actual pounds purchased and used in production 11,302 Actual price paid for materials $23,169 Labor: Standard hourly labor rate $14.34 per hour Standard hours allowed per completed unit 4.6 Actual labor hours worked 5,000.65 Actual total labor costs $76,260 Overhead: Actual and budgeted fixed overhead $1,048,000 Standard variable overhead rate $25.00 per standard labor hour Actual variable overhead costs $140,018 Overhead is applied on standard labor hours. Round your final answer to the nearest dollar. Do not round interim calculations. The fixed factory overhead volume variance is a.$100,507 unfavorable b.$100,507 favorable c.$28,353 unfavorable d.$28,353 favorable

Answer 1

$100,507.91 Favorable

Step-by-step explanation:

The computation of fixed factory overhead volume variance is shown below:-

Absorption rate = Budgeted fixed overhead ÷ Budgeted production

= $1,048,000 ÷ 1,074

= $975.79

Absorbed overhead = Actual production × Absorption rate

= 971 × $975.79

= $947,492.09

Fixed factory overhead volume variance = Budgeted overhead - Absorbed overhead

= $1,048,000 - $947,492.09

= $100,507.91 Favorable

Therefore for computing the fixed factory overhead volume variance we simply applied the above formula.