Holl Corporation has provided the following data for November. Denominator level of activity 4,800machine-hoursBudgeted fixed manufacturing overhead costs$56,640 Standard machine-hours allowed for the actual output 5,100machine-hoursActual fixed manufacturing overhead costs$55,860 Required:a. Compute the budget variance for November.b. Compute the volume variance for November.
What will be an ideal response?
a.
Budget variance = Actual fixed manufacturing overhead cost ? Budgeted fixed manufacturing overhead cost = $55,860 ? $56,640 = $780 F
b.
Fixed portion of the predetermined overhead rate = $56,640 ÷ 4,800 machine-hours = $11.80 per machine-hour
Volume variance = Fixed portion of the predetermined overhead rate × (Denominator hours ? Standard hours allowed)
= $11.80 per machine-hour × (4,800 machine-hours ? 5,100 machine-hours)
= $11.80 per machine-hour × (?300 machine-hours)
= $3,540 F
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