Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 7,300 machine-hours. The budgeted fixed manufacturing overhead costs are $257,690. In April, the actual fixed manufacturing overhead costs were $262,800 and the standard machine-hours allowed for the actual output were 7600 machine-hours.
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 ) :-
|Actual Budgeted fixed overhead||$262,800|
|Budget variance for April||
= $262,800 - $257,690
= $5,110 [ unfavorable ]
b ) :-
|Denominator level of activity||7,300 machine-hours|
|Standard machine-hours||7600 machine-hours|
|budgeted fixed manufacturing overhead costs||$257,690|
|Budgeted Fixed manufacturing overhead rate||
= $257,690 / 7,300
|Volume variance for April||
= [ 7,300 - 7600 ] * 35.3
= - 300 * $35.3
= - $10,590 [ favorable ]
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