Calculate the fixed overhead production-volume variance

Reference no: EM13175494

1. Your company has recently implemented a standard costing system. Among the results from the first month are the following:

Budgeted production: 6,000 units

Actual production: 6,250 units

Direct material standard for one unit: 2 ounces × $6.00 per ounce

Actual direct material purchases: $74,240 for 12,800 ounces

Actual direct material used: 12,600 ounces

Fixed overhead standard for one unit: 1.5 machine hours × $3 per hour*

Actual fixed overhead incurred: $25,000

Actual machine hours worked: 9,500 hours

* Overhead rate based on budgeted capacity utilization

a. Calculate the direct material price and usage variances.

DMPV
DMUV

b. Provide your supervisor with one possible cause for each of the above variances other than "the standards were wrong."

DMPV:

DMUV:

c. Calculate the fixed overhead production-volume variance.

2. Refer to the previous problem. Additional information:

There were no unfinished units at the end of the month
5,750 units were sold

If the company were to prorate the variances, how much ($) of the direct material usage variance would be allocated to finished goods inventory?

Reference no: EM13175494

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