Question

gndelssohn Manufacturing, Inc. uses a standard costing system with fixed manufacturing overhead (FMOH) applied based on machine-hours (MHs). According to their standards, each unit of their most popular product requires 2 MHs For the most recent period: Budgeted Units Actual Units 1,600 units 1,586 units 3,400 MHs Actual MHs Budget Actual $ 45,200 FMOH $ 44,800 The FMOH volume variance for the period was closest to: $392.00 Unfavorable A. В. $400.00 Unfavorable $3,004.24 Unfavorable $2,800.00 Favorable C. D. Е. None of the above 9 Bernstein Corporation uses machine hours (MHs) as its denominator activity for fixed manufacturing overhead (FMOH). For the most recent year, the company showed the following data. At the beginning of the year: Budgeted MHs (denominator level) 600,000 MHs At the end of the year: Actual FMOH FMOH Budget Variance FMOH Volume Variance 270,000 30,000 Favorable 16,500 Favorable $ Bernstein's standard MHs allowed for actual output was be closest to: 558,750 MHs 567,000 MHs 633,000 MHs A. В. С. 641,250 MHs None of the above BCDE

Answer 1

Solution 8:

Fixed overhead rate = Budgeted fixed overhead / Budgeted MHs = $44,800 / 3200 = $14 per MH

FMOH volume variance = Fixed overhead applied - Budgeted fixed overhead = (1586*2*$14) - $44,800 = $392 unfavorable

Hence option A is correct.

Solution 9:

Budgeted FMOH = Actual FMOH + Favorable budget variance = $270,000 + $30,000 = $300,000

Fixed overhead rate = $300,000 / 600000 = $0.50 per MH

Fixed overhead applied = Budgeted fixed overhead + Favorable volume variance = $300,000 + $16,500 = $316,500

Standard MHs allowed for actual output = Fixed overhead applied / overhead rate = $316,500 / $0.50 = 633000 hours

Hence option C is correct.