Basic Accounting question You brought your work home one evening, and your nephe

Question

Basic Accounting question

You brought your work home one evening, and your nephew spilled his chocolate milk shake on the variance report you were preparing. Fortunately, knowing that overhead was applied based on machine hours, you were able to reconstruct the obliterated information from the remaining data. Fill in the missing numbers below. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round all overhead rates and "Actual machine hours" to 2 decimal places. Round all other calculations to the nearest whole number or dollar.)

Explanation / Answer

Fixed overhead volume variance is figure we have to get.

Budgeted Fixed overhead : $18400

Budgeted production in units: 11500

Actual production in units ;30611

Fixed Overhead applicable rate = $18400 / 11500 = $1.60

Applied Fixed Overhead = Actual prodution in units * Fixed Overhead applicable rate

= 30611 * $1.60 = $48978

Fixed overhead volume variance = Applied Fixed Overhead on actual units - Budgeted Fixed overhead

Fixed overhead volume variance = $48978 - $18400 = $30578 (Favourable)

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