Period one year A base total estimated machine hours (MH) 20,000 E (FOC) Estimat
ID: 2563188 • Letter: P
Question
Period
one year
A base
total estimated machine hours (MH)
20,000
E (FOC)
Estimated fixed costs
$2,400,000
During March 20x1
Actual fixed overhead costs incurred
$210,000
Machine hours used
2000
Applied fixed overhead rate =
Production volume variance =
Flexible budget variance =
Fixed overhead allocated by
$120/DLH
$100/DLH
$10,000 unfavorable
$40,000 favorable
$240,000
$210,000
$10,000 favorable
$40,000 unfavorable
Period
one year
A base
total estimated machine hours (MH)
20,000
E (FOC)
Estimated fixed costs
$2,400,000
During March 20x1
Actual fixed overhead costs incurred
$210,000
Machine hours used
2000
Explanation / Answer
Solution A Estimated Fixed Cost 2,400,000 Estimated machine hours 20,000 Applied Fixed overhead rate =2400000/20000 120 Per Direct labor hour Solution B Prouduction Volume variance Estimated monthly usage =20000/12 1,666.67 Actual Usage 2000 Volume variance =(2000-1666.666)*120 40,000 Solution C Flexible budget variance Actual fixed cost 210,000 Estimated fixed cost 200,000 Flexible budget variance 10,000 Solution D Fixed overhead allocation Actual Usage 2,000 Allocation rate 120 Actual Allocation 240,000 Budgeted 200,000 So Variance unfavorable (40,000)