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13 July, 16:01

Nexus industries uses a standard costing system to apply manufacturing costs to its production process. In May nexus anticipated 2700 units with fixed manufacturing overhead costs allocated at $8.40 per direct labor hour with a standard of 2.5 direct labor hours per unit. In May, actual production was 3400 units and actual fixed manufacturing overhead cost were $23000. What was nexus fixed manufacturing overhead volume variance in May?

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  1. 13 July, 19:22
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    The nexus fixed manufacturing overhead volume variance in May was = 14,700 Unfavorable

    Explanation:

    Fixed manufacturing overhead volume variance

    = Absorbed rate * (Actual Labor Hours - budgeted labor hours

    = 8.40 * (3400*2.5 - 2700*2.5)

    = 8.40 * (8500-6750)

    = 14,700 Unfavorable
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