Sanford Ltd. produces a product with the following standard cost card Direct mat

Question

Sanford Ltd. produces a product with the following standard cost card Direct materials (20 kg) Direct labour (8 hours) Variable overhead (8 hours) Fixed overhead (8 hours) $50.00 84.00 21.00 33.91 The fixed overhead rate is based on a standard monthly volume of 16297 units. The actual results for the month of July 20x5 are as follows: Direct materials purchased and used (325500 kg Direct labour (94736 hours) Variable overhead Fixed overhead Units produced and sold 620000 1023000 320000 549609 15482 units What is Sanford's fixed overhead volume variance for July 20x5 (note: a negative number represents an unfavourable variance and a positive number represents a favourable variance)? Select one a. $165917 b $27637 ? $3022 d $27637 X The correct answer is: S-27637

Explanation / Answer

Fixed overhead volume variance = Budgeted overhead-Applied overhead

= (16297*33.91)-(15482*33.91)

Fixed overhead volume variance = -27637

So answer is b) $-27637

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