Acme Company\'s production budget for August is 19,500 units and includes the fo

Question

Acme Company's production budget for August is 19,500 units and includes the following component unit costs: direct materials, S8.0, direct labor, $12.0; variable overhead, $6. Budgeted fixed overhead is $52,000. Actual production in August was 21,450 units. Actual unit component costs incurred during August include direct materials, $10.20, direct labor, $11.40, variable overhead, $7.20. Actual fixed overhead was $55,500. The standard fixed overhead application rate per unit consists of $2.6 per machine hour and each unit is allowed a standard of 1 hour of machine time Required e fora o able ?? 0- alculate he fixed overhead budget vanance and the xed overhead volume variance. Indicate the effect of each variance by se ec "None" for no effect (i.e., zero variance).) a ma orable and Fixed overhead budget variance Fixed overhead volume S 3,500 $ (1,950) eBook & Resources

Explanation / Answer

Fixed overhead Volume variance = Standard fixed overhead aplication rate per unit * (Budgeted Output - Actual Output) Fixed overhead Volume variance = 2.6 * (19500 - 21450) Fixed overhead Volume variance = 2.6 * (-1950) Fixed overhead Volume variance = -5070 Fixed overhead Volume variance = 5070 Favourable

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