9. Leek Company predicted that the fixed overhead would be $200,000 in April 201

Question

9. Leek Company predicted that the fixed overhead would be $200,000 in April 2015. Production amounted to 60,000 actual and 50,000 budgeted decks of cards. Each deck takes approximately 0.20 machine hours to produce. The actual overhead costs per machine hour are $25. What is the production-volume variance?

Select one: a. $5,000 unfavourable b. $150,000 favourable c. $40,000 unfavourable d. $40,000 favourable 9. Leek Company predicted that the fixed overhead would be $200,000 in April 2015. Production amounted to 60,000 actual and 50,000 budgeted decks of cards. Each deck takes approximately 0.20 machine hours to produce. The actual overhead costs per machine hour are $25. What is the production-volume variance?

Select one: a. $5,000 unfavourable b. $150,000 favourable c. $40,000 unfavourable d. $40,000 favourable

Select one: a. $5,000 unfavourable b. $150,000 favourable c. $40,000 unfavourable d. $40,000 favourable

Explanation / Answer

Solution: $40,000 favourable

Working: Production-volume variance = $200,000 - (60,000 * ($200,000/50,000))

= $40,000 favourable

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