Lossing Corporetion applies menufacturing overhead to produc

Lossing Corporetion applies menufacturing overhead to products on the basis of standerd mechine-hours. Budgeted and actual overhead costs for the most recent month appear below Original Budget Actual Costs Variable overhead costs: Suppliers Indirect labor $7,700 10,710 $ 7,890 10,060 Fixed overhead costs: Supervision Utilities Factory depreciation 15,510 14,800 59,780 $108,500 14.480 14,850 60,760 $108,040 Zotal overhead cost The company based its original budget on 7,700 machine-hours. The company actually worked 7,660 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 7,590 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month? (Round your intermediate calculations to 2 decimal places.) Multiple Choice $1191 favorable $1287 unfavoreble $1191 unfavorable $1,287 favworable

Solution

Fixed O/H Volume Variance = Budgeted O/H - Absorbed O/H

Budgeted O/H = 15510 + 14800 + 59780 = 90090

Absorbed O/H = Std Hrs * Predetermined O/H rate per hr

Std Hrs = 7590 hrs

Predetermined O/H Rate = Bdt OH/Bdt Hrs

= 90090/7700 = 11.70

Absorbed O/H = 7590 * 11.70 = 88803

Varaiance = 90090 - 88803 = 1287 (Unfavourable)