The management of Brickstone Industries is analyzing fixed manufacturing overhea

Question

The management of Brickstone Industries is analyzing fixed manufacturing overhead variances for the fiscal period just ended. It notices that the total fixed manufacturing overhead variance was $240,000 Unfavorable and that the fixed overhead budget variance was $100,000 Favorable. However, Brickstone’s accountants had failed to calculate the fixed overhead volume variance. The standard fixed overhead rate was $10 per machine hour.

What is Brickstone’s fixed overhead volume variance?

A.

$140,000 (F)

B.

$340,000 (F)

C.

$340,000 (U)

D.

$200,000 (U)

Blue Lite manufactures decorative weather vanes that have a standard materials cost of two pounds of raw materials at $2 per pound. During November 500 pounds of raw materials costing $4 per pound were used in making 450 weather vanes. The materials price and quantity variance are:

A.

Material Price Variance 1,000 U, Material Quantity variance 800 U

B.

Material Price Variance 500 U, Material Quantity variance 400 F

C.

Material Price Variance 1,000 F, Material Quantity variance 800 F

D.

Material Price Variance 500 F, Material Quantity variance 400 U

A.

$140,000 (F)

B.

$340,000 (F)

C.

$340,000 (U)

D.

$200,000 (U)

Explanation / Answer

1.Fixed Overhead volume variance= Total Overheads- Budgeted Fixed overheads

= 240000-(-100000)= $340000F

2.Material price variance=Standard price*Actual Quantity- Actual price*Actual Quantity

=4*500-2*500=1000F

Material Quantity VAriance=actual quantity at standard price and the standard cost is the direct materials quantity variance

= ( SQ AQ ) × SP=

=2(450-500)*4=800F

..

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