Radon Corporation manufactured 38 comma 10038,100 grooming kits for horses during March. The following fixed overhead data pertain to March: Actual Static Budget Production 38 comma 10038,100 units 35 comma 00035,000 units Machine-hours 7 comma 1007,100 hours 7 comma 0007,000 hours Fixed overhead costs for March $ 149 comma 200$149,200 $ 140 comma 000$140,000 What is the fixed overhead production-volume variance? A. $ 9 comma 200$9,200 favorable B. $ 12 comma 400$12,400 favorable C. $ 9 comma 200$9,200 unfavorable D. $ 12 comma 400$12,400 unfavorable

Question

Business

Big Mac

8 April, 01:55

Radon Corporation manufactured 38 comma 10038,100 grooming kits for horses during March. The following fixed overhead data pertain to March: Actual Static Budget Production 38 comma 10038,100 units 35 comma 00035,000 units Machine-hours 7 comma 1007,100 hours 7 comma 0007,000 hours Fixed overhead costs for March $ 149 comma 200$149,200 $ 140 comma 000$140,000 What is the fixed overhead production-volume variance? A. $ 9 comma 200$9,200 favorable B. $ 12 comma 400$12,400 favorable C. $ 9 comma 200$9,200 unfavorable D. $ 12 comma 400$12,400 unfavorable

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Answers (1)

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Andreas Solis · Answer 1

Fixed overhead variance $12400 favorable

Explanation:

Predetermined overhead absorption rate =

Estimated Fixed overhead / Estimated number of unit

= $140,000 / 35,000 units

= $4 per unit

Fixed overhand volume variance

units

Budgeted production volume 35,000

Actual production volume 38,100

Variance in units 3,100 favorable

Standard fixed overhead rate * $4

Fixed overhead variance $12400 favorable

Fixed overhead variance $12400 favorable