Problem 10A-9 (continued)
Fixed overhead variances:
Actual Fixed
Overhead
Budgeted Fixed
Overhead
Fixed Overhead Applied to
Work in Process
$209,400
$210,000
32,000 hours ×
$6 per hour = $192,000
Budget Variance,
$600 F
Volume Variance,
$18,000 U
Alternative solution:
Budget variance:
Budget Actual fixed Budgeted fixed
= –
variance overhead overhead
= $209,400 – $210,000
= $600 F
Volume variance:
Fixed portion of Standard
Volume Denominator
= the predetermined – hours
Variance hours
overhead rate allowed
= $6.00 per hour (35,000 hours – 32,000 hours)
= $18,000 U
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Verification:
Variable overhead rate variance ……..
$ 3,000
U
Variable overhead efficiency variance
5,000
F
Fixed overhead budget variance ……..
600
F
Fixed overhead volume variance …….
18,000
U
Underapplied overhead ………………..
$15,400
U
