The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units.
Compute the factory overhead volume variance.
Answer
A.$9,000F
B.$9,000U
C.$5,500F
D.$5,500U
To compute the factory overhead volume variance, we need to compare the budgeted fixed overhead with the standard fixed overhead for the actual production level.
First, let's calculate the standard fixed overhead for the actual production level:
Standard fixed overhead = Budgeted fixed overhead / Budgeted production level
Standard fixed overhead = $360,000 / 12,000 units
Standard fixed overhead = $30 per unit
Next, we need to find the standard fixed overhead for the actual production:
Standard fixed overhead for actual production = Standard fixed overhead per unit * Actual production
Standard fixed overhead for actual production = $30 per unit * 11,700 units
Standard fixed overhead for actual production = $351,000
Finally, we can calculate the factory overhead volume variance:
Factory overhead volume variance = Actual fixed overhead - Standard fixed overhead for actual production
Factory overhead volume variance = $360,000 - $351,000
Factory overhead volume variance = $9,000
Therefore, the correct answer is A. $9,000F