Modine Corporation has provided the following data for September.?Denominator level of activity1,600 machine-hours?Budgeted fixed manufacturing overhead costs$42,400??Fixed portion of the predetermined overhead rate$26.50 per machine-hour?Actual level of activity1,700 machine-hours?Standard machine-hours allowed for the actual output2,000 machine-hours?Actual fixed manufacturing overhead costs$41,740?Required:a. Compute the budget variance for September. Show your work!b. Compute the volume variance for September. Show your work!
What will be an ideal response?
a. Budget variance = Actual fixed manufacturing overhead cost ? Budgeted fixed manufacturing overhead cost = $41,740 - $42,400 = $660 F
b. Volume variance = Fixed portion of the predetermined overhead rate × (Denominator hours - Standard hours allowed)
= $26.50 per machine-hour × (1,600 machine-hours - 2,000 machine-hours)
= $26.50 per machine-hour × (-400 machine-hours)
= $10,600 F
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