Question

Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,900 machine-hours. The budgeted fixed manufacturing overhead costs are $328,410. In April, the actual fixed manufacturing overhead costs were $334,640 and the standard machine-hours allowed for the actual output were 9,200 machine-hours. Required: a. Compute the budget variance for April. b. Compute the volume variance for April. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Answer

• All working forms part of the answer
• Budget Variance: requirement [a]

Overhead Budget Variance
(	Budgeted Fixed Overhead	-	Actual Fixed Overhead incurred	)
(	$           328,410.00	-	$          334,640.00	)
	-6230
	Variance		$ 6,230			Unfavourable-U

• Volume Variance: Requirement [b]

Overhead Volume Variance
(	Standard Fixed Overhead or Fixed Overhead absorbed = (328410/8900) x 9200	-	Budgeted Fixed Overhead	)
(	$           339,480.00	-	$          328,410.00	)
	11070
	Variance		$ 11,070			Favourable-F