Fixed overhead variances—various issues Silverstone’s production budget for March called for making 200,000 units of a single product. The firm’s production standards allow one-quarter of a machine hour per unit produced. The fixed overhead budget for March was $108,000. Silverstone uses an absorption costing system. Actual activity and costs for March were:
Units produced | 195,000 |
Fixed overhead costs incurred | $111,000 |
Required:
a. Calculate the predetermined fixed overhead application rate that would be used in March.
b. Calculate the number of machine hours that would be allowed for actual March production.
c. Calculate the fixed overhead applied to work in process during March.
d. Calculate the over- or underapplied fixed overhead for March.
e. Calculate the fixed overhead budget and volume variances for March.
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