Standard and actual cost data for Willey Corporation for the first three quarters of the year are

Question:

Standard and actual cost data for Willey Corporation for the first three quarters of the year are shown below.

Standards:

Machine hours per unit produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0

Units produced per quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

Fixed manufacturing overhead per quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$325,000

Actual Fixed Overhead Costs Actual Direct Machine Hours Actual Number of Units Produced 25,500 23,000 26,500 First quart

Required:
1. Compute the fixed overhead budget variance for each quarter.
2. Compute the volume variance for each quarter.
3. Interpretive Question: At the end of the third quarter, the production manager at Willey Corporation believes that favorable volume variance in the third quarter means that he has more money to spend in production. Explain to the production manager what the volume variance represents and why it does not indicate that there is more money to spend inproduction.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...