Question

Cyberdyne Systems Corporation uses a standard-costing system. The production budget for the fiscal year (FY) ended 30 November 2018 was based on 200,000 units of output. Each unit requires two standard hours of manufacturing labor for completion. Total overhead was budgeted at $900,000 for the year, and the budgeted fixed overhead rate was $3 per unit of output. Both fixed and variable overhead are allocated to the product on the basis of direct manufacturing labor-hours. The actual data for the fiscal year ended 30 November 2018 are as follows: actual production in units, 198,000; actual direct manufacturing labor-hours, 440,000; actual variable overhead, $352,000; actual fixed overhead, $575,000. Question 14: The Cyberdyne output level variance for FY2018 is closest to: a. $25,000 F b. $55,000 U c. $19,000 F d. $6,000 U

Answer 1

Solution:

Production volume variance = Fixed overhead applied - Budgeted fixed overhead

= (198000*$3) - (200000*$3) = $6,000 U

Hence option d is correct.