Question

# Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 7,300...

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.

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 ) :-

 Particulars Amount Actual Budgeted fixed overhead \$262,800 Fixed overhead \$257,690 Budget variance for April = \$262,800 - \$257,690 = \$5,110 [ unfavorable ]

b ) :-

 Particulars Amount 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 = \$35.3 Volume variance for April = [ 7,300 - 7600 ] * 35.3 = - 300 * \$35.3 = - \$10,590 [  favorable ]

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