ABC Company began operations on June 1, 2019. For its first month of operations,
ID: 2581323 • Letter: A
Question
ABC Company began operations on June 1, 2019. For its first month of
operations, ABC Company established the following standards for one
unit of its single product:
standard quantity standard price
direct materials 3 pounds $3.90 per pound
direct labor 5 hours $16.00 per hour
variable overhead 5 hours $7.40 per hour
fixed overhead 5 hours $8.10 per hour
The following information is available for the month of June:
1. 37,000 pounds of direct materials were purchased at a total
cost of $107,300.
2. 38,000 direct labor hours were worked at a total cost of
$617,500.
3. The variable overhead cost for the month totaled $325,000.
4. The fixed overhead cost for the month totaled $290,000.
5. 7,800 units were produced.
6. At June 30, ABC Company had 6,000 pounds of direct materials
on hand.
7. The denominator hours for June were 41,000 hours.
Calculate the fixed overhead volume variance for June. If
the variance is favorable, enter an F after your number with
a space between the number and the F (i.e., 10,000 F). If
the variance is unfavorable, enter a U after your number with
a space between the number and the U (i.e., 10,000 U). Do not
use decimals in your answer.
Explanation / Answer
Calculate Fixed overhead volume variance :
Fixed overhead volume variance = Budgeted fixed overhead-Fixed overhead applied
= (41000*8.10)-(7800*5*8.10)
Fixed overhead volume variance = 16200 F