The following data are given for Bahia Company: Budgeted production 1,000 units Actual production 980 units Materials: Standard price per pound $2.00 Standard pounds per completed unit 12 Actual pounds purchased and used in production 11,800 Actual price paid for materials $23,000 Labor: Standard hourly labor rate $14.00 per hour Standard hours allowed per completed unit 4.5 Actual labor hours worked 4,560 Actual total labor costs $62,928 Overhead: Actual and budgeted fixed overhead $27,000 Standard variable overhead rate $3.50 per standard direct labor hour Actual variable overhead costs $15,500 Overhead is applied on standard labor hours. The fixed factory overhead volume variance is a.$65 unfavorable> b.$540 unfavorable c.$65favorable d.$540 favorable

Question

Merle

Business

6 July, 13:46

The following data are given for Bahia Company: Budgeted production 1,000 units Actual production 980 units Materials: Standard price per pound $2.00 Standard pounds per completed unit 12 Actual pounds purchased and used in production 11,800 Actual price paid for materials $23,000 Labor: Standard hourly labor rate $14.00 per hour Standard hours allowed per completed unit 4.5 Actual labor hours worked 4,560 Actual total labor costs $62,928 Overhead: Actual and budgeted fixed overhead $27,000 Standard variable overhead rate $3.50 per standard direct labor hour Actual variable overhead costs $15,500 Overhead is applied on standard labor hours. The fixed factory overhead volume variance is a.$65 unfavorable> b.$540 unfavorable c.$65favorable d.$540 favorable

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Answers (1)

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Lucille · Answer 1

Volume overhead $ 540 unfavorable

Explanation:

The volume overhead is the difference between the budgeted units and actual units multiplied by the cost unit

Fixed over cost per unit = budgeted cost/Budgeted unit

= $27,000/1000 units

= $27

Volume variance

Units

Budgeted unit 1000

Actual unit 980

Difference 20 unfavorable

Standard fixed overhead per unit * $27

Volume overhead 540 unfavorable