Question

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

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

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Homework Answers

Answer #1
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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