Radon Corporation manufactured 33,000 grooming kits for horses during March. The company uses machine hour to allocate fixed manufacturing overhead. The following fixed overhead data pertain to March:

Actual Static Budget

Production 33,000 units 30,000 units

Machine-hours 6,600 hours 6,000 hours

Fixed Overhead Costs for March $153,000 $144,000

1. What is the fixed overhead production-volume variance? (HINT: The answer is $14,400 favorable, but I need work to support this)

2. What is the fixed overhead spending variance? (HINT: The answer is $9,000 unfavorable, but I need work to support this)

Question

Bobbie

Business

2 November, 13:47

Radon Corporation manufactured 33,000 grooming kits for horses during March. The company uses machine hour to allocate fixed manufacturing overhead. The following fixed overhead data pertain to March:

Actual Static Budget

Production 33,000 units 30,000 units

Machine-hours 6,600 hours 6,000 hours

Fixed Overhead Costs for March $153,000 $144,000

1. What is the fixed overhead production-volume variance? (HINT: The answer is $14,400 favorable, but I need work to support this)

2. What is the fixed overhead spending variance? (HINT: The answer is $9,000 unfavorable, but I need work to support this)

+3

Answers (1)

Know the Answer?

Daniela Good · Answer 1

1) The fixed overhead production-volume variance is $14400 favourable.

2) The fixed overhead spending variance is $9000 unfavourable.

Explanation:

1)

Fixed overhead production volume variance

= amount applied * amount budgeted

= 144000/30000

= 4.80 per unit

= 4.80*33000 - 144000

= $14400 favourable

Therefore, The fixed overhead production-volume variance is $14400 favourable.

2)

fixed overhead spending variance

= actual overhead - budgeted overhead

= 153000 - 144000

= $9000 unfavourable

Therefore, The fixed overhead spending variance is $9000 unfavourable.