Sanford Ltd. produces a product with the following standard cost card:
Direct materials (20 kg) 
$50.00 

Direct labour (7 hours) 
84.00 

Variable overhead (7 hours) 
21.00 

Fixed overhead (7 hours) 
33.38 
The fixed overhead rate is based on a standard monthly volume of
16366 units.
The actual results for the month of July 20x5 are as follows:
Direct materials purchased and used (325500 kg) 
$620000 

Direct labour (96688 hours) 
1023000 

Variable overhead 
320000 

Fixed overhead 
574715 

Units produced and sold 
15218 units 
What is Sanford’s fixed overhead volume variance for July 20x5
(note: a negative number represents an unfavourable variance and a
positive number represents a favourable variance)?
Select one:
a. $28418
b. $38320
c. $86895
d. $38320
Answer is b. $ 38320  
Explanation:  
Applied Fixed oh on actual output:  
Actual output  15218  
Multiply: Fixed OH rate per unit  33.38  
Applied Fixed oh on actual output:  507976.8  
Budgeted Fixed Overheads  
Budgeted Output  16366  
Multiply: Fixed OH rate per unit  33.38  
Budgeted Fixed Overheads  546297.1  
Fixed OH volume variance  38320.2  
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