Question

Likert company manufactures extremely accurate scales. They use a standard costing system. Last year the company projected that 296,000 scales would be produced. When Likert company closed out manufacturing overhead, they recorded a $134,000 debit to the FOH Budget Variance and a $151,000 credit to the FOH Volume Variance. Likert company budgeted $2,466,000 of fixed overhead. What was the actual amount of fixed overhead?

Answer 1

• Actual Amount of Fixed Overhead = $ 2,449,000
• The same is calculated below:

Budgeted Overhead	$     2,466,000.00
Add: FOH Budget Variance	$         134,000.00
Less: FOH Volume variance	$         151,000.00
Actual Fixed Overhead	$     2,449,000.00 = Answer

• This can also be ascertained through journal entry and information as to debit and credit in the question:

Accounts title	Debit	Credit
WIP	$    2,466,000.00
FOH Budget Variance	$        134,000.00
FOH Volume Variance		$       151,000.00
Manufacturing Overhead		$   2,449,000.00 = ANSWER