4. 10.00 points value: Exercise 16-39 Fixed Cost Variances (LO 16-6) Information

Question

4. 10.00 points value: Exercise 16-39 Fixed Cost Variances (LO 16-6) Information on Carney Company's fixed overhead costs follows: Overhead applied Actual overhead Budgeted overhead $362,400 389,100 375,000 Required: What are the fixed overhead price and production volume variances? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Fixed overhead price variance Fixed overhead production volume variance

Explanation / Answer

Fixed Overhead Price Variance = Actual Fixed Overhead - Budgeted Fixed Overhead

= $ 389,100 - $ 375,000

= $ 14,100 Unfavorable

This is because the Actual Overhead is more than the Budgeted Overhead, hence unfavorable

Hence the correct answer is $ 14,100 U

Fixed Overhead Production Volume Variance =  Budgeted Fixed Overhead - Allocated Fixed Overhead

= $ 375,000 - $ 362,400

= $ 12,600 Unfavorable

Hence the correct answer is $ 12,600 U

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