The following information relates to Thomas Manufacturing's overhead costs for the month:
Thomas allocates manufacturing overhead to production based on standard direct labor hours.
Thomas reported the following actual results for last month: actual variable overhead, $14,500; actual fixed overhead, $5,400; actual production of 4,700 units at 0.22 direct labor hours per unit. The standard direct labor time is 0.20 direct labor hours per unit.
Compute the fixed overhead volume variance.
FOH volume variance = Budgeted FOH - Allocated FOH*
= $5,600 - $5,264
= $336 U
* Allocated FOH = $5.60** per DL Hr × 940*** DL Hr = $5,264
** Standard FOH allocation rate: Budgeted FOH / Budgeted allocation base
$5,600 / 1,000 DL Hr = $5.60 per DL Hr
*** 4,700 units produced × 0.20 standard direct labor hours per unit = 940 DL Hr
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