Reference no: EM132516691

CBA is an intricate furniture manufacturer. Each item of furniture is hand-made and takes an average of 1.5 hours. CBA uses direct labor hours to allocate the overhead cost to production. The CBA facility produce 1,200 items of furniture a month and budgeted fixed overhead cost that include rent, depreciation, supervisor salaries, at $10,800 per month. In the month of April, CBA produces 720 items of furniture and actual fixed costs new $11,400.

Required:

Question 1: What is the fixed overhead spending variance and is it favorable or unfavorable?

Question 2: If CBA uses direct labor hours available at capacity to calculate the budgeted fixed over head rate, what is the production volume variance? Is the favorable or unfavorable?

Question 3: CBA's budgeted variable cost per unit is $25, and it expects to sell its each item of furniture for $55. What is the sales volume variance and reconcile it with the production volume variance calculated in requirement2. What does each concept measure?