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Lossing Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual ovBartoletti Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the b

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Answer #1

1.

Fixed Overhead Volume Variance = (Standard Hours - Budgetted hours) * Standard Fixed Budget rate.

Standard Hours = 7690

Budgetted hours = 7800

Standard Fixed Budget Rate => (Supervision ie 15610 + Utilities 14900 + Factory depreciation 59970 = 90480) / Budgetted Hours ie 7800 => 90480 / 7800 = 11.6 $

So, Fixed Overhead Volume Variance = (7690 - 7800) * 11.6 = 1276 (Unfavorable)

Hence Option D is correct.

2. Variable O/H Rate variance = (Standard rate per hour - Actual rate per hour) * Actual Hours

ie, Standard rate per hour = 9.4 $ (given)

Actual rate per hour = 66790/6800 = 9.822 $.

So, Variable O/H Rate variance = (9.4 - 9.822) * 6800 =2870 (Unfavorable) ..(1)

Next, Fixed Overhead Budget Variance = Budgteed Fixed O/H - Actual Fixed O/H

ie., 78000 - 82000 = 4000 (Unfavorable) ...(2)

So, (1) + (2) = 2870 + 4000 = 6870 (Unfavorable).

Option D is correct

Please comment in case of any query regarding the solution.

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