Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 8 - Flexible Budgets, Overhead Cost Variances, and Management Control - Assignment Material - Exercises - Page 319: 8-26(2)

Answer

Production-Volume Variance: \$4,320 U (Unfavorable)

Work Step by Step

Production-Volume Variance: The production-volume variance is calculated using the difference between the actual level of production (720 pieces) and the budgeted level of production (1,200 pieces). Production-Volume Variance = (Budgeted Fixed Overhead / Budgeted Production) * (Actual Production - Budgeted Production) Production-Volume Variance = (\$10,800 / 1,200) * (720 - 1,200) Production-Volume Variance = (\$9) * (-480) = \$4,320 U (Unfavorable)
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