Jenny’s Corporation manufactured 25,000 grooming kits for horses during March.
The fixed-overhead cost-allocation rate is $20.00 per machine-hour.
The following fixed overhead data pertain to March:
Actual Static Budget
Production 25,000 units 24,000 units
Machine-hours 6,100 hours 6,000 hours
Fixed overhead costs for March $123,000 $120,000
g. What is March’s fixed overhead spending variance?
fosv=afo-bfo
120000-123000
3000 unfavorable
h. What is March’s fixed overhead production-volume variance?
fopvv=afo-bfo
25000*5-120000
5000 favorable
F What is the amount of fixed overhead allocated to production?
Answer: $125000
[25,000 x (6,000/24,000)] x $20.00 = $125,000
g What is the fixed overhead spending variance?
Answer: $3,000 U
Working notes for the above answer is as under
$123,000 actual costs – $120,000 budgeted cost = $3,000 U
- What is the fixed overhead production-volume variance?
Answer: $5,000 F
Working notes for the above answer is as under
$120,000 – [25,000 x (6,000/24,000) x $20.00] = $5,000 F
