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Brady Ltd uses a normal absorption costing system in which the overhead rate and variable manufacturing costs have remained unchanged for the last 2 years.

Brady Ltd uses a normal absorption costing system in which the overhead rate and variable manufacturing costs have remained unchanged for the last 2 years. During the current year the following activity occurred. Denominator volume 25 000 units Unit sales 20 000 units Cost of goods sold $170 000 Volume variance $5 040 unfavourable Operating income after adjusting for the volume variance $40 000 Budgeted fixed overhead $90 000 The firm had no beginning or ending work in process inventories. However, there were 1000 units in beginning finished goods. The fixed overhead in cost of goods sold amounted to: $90 000. $84 960. $72 000. $66 960

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