Question

Mendelssohn Manufacturing, Inc. uses a standard costing system with applied based on machine-hours (MHs). According to their standards, cach requires 2 MHs. For the most recent period: Budgeted Units 1,600 units Actual Units 1,586 units Actual MHs 3,400 MHS & system with fixed manufacturing overhead (FMOH) cards, cach unit of their most popular product $ FMOH Budget Actual 44,800 $ 45,200 The FMOH volume variance for the period was closest to: $392.00 Unfavorable $400.00 Unfavorable $3,004.24 Unfavorable $2,800.00 Favorable None of the above 9 Bernstein Corporation uses machine hours (MH) 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 641,250 MHS None of the above

Answer 1

Solution 1:

Fixed overhead rate = Budgeted overhead / Budgeted MH = $44,800 / (1600*2) = $14 per MH

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

Hence option A is correct.

Solution 9:

Budgeted FMOH = Actual FMOH + Budget variance

= $270,000 + $30,000 = $300,000

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

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

Standard MH allowed for actual output = $316,500 / 0.50 = 633000 machine hour

Hence option C is correct.