Question

Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,700...

Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,700 machine-hours. The budgeted fixed manufacturing overhead costs are \$319,290. In April, the actual fixed manufacturing overhead costs were \$325,380 and the standard machine-hours allowed for the actual output were 9,000 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.)

a. Compute the budget variance for April.

b. Compute the volume variance for April.

Given data;-

denominator level of activity = 8,700 machine-hours.

budgeted fixed manufacturing overhead costs = \$319,290.

actual fixed manufacturing overhead costs were = \$325,380

actual output were = 9,000 machine-hours.

So that the budgeted Variance = Budgeted Overhead cost - Actual Overhead cost

=319290 - 325380
=(6090) unfavourable Variance

Then after find out
Volume Variance = (Actual labor hours - Budgeted labor hours) x Budgeted cost per hour
=(9000-8700)*319290/8700
=300*36.7
=11010

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