Question
Delta Company uses a standard costing system with direct labors hours being the basis (cost driver) for applying overhead. Delta Companys standard cost card shows
Delta Company uses a standard costing system with direct labors hours being the basis (cost driver) for applying overhead.
Delta Companys standard cost card shows the following for one unit of product Gamma.
| Std Qty | Std price (rate) | Std. cost |
Direct materials | 4.0 pounds | $10.00 per pound | $40.00 |
Direct labor | 2.0 hours | $15.00 per hour | $30.00 |
Variable Overhead | 2.0 hours | $1.00 per DL hour | $ 2.00 |
Fixed Overhead | 2.0 hours | $8.00 per DL hour | $ 16.00 |
|
|
| $88.00 |
During the month of August the following was recorded by the company relative to its production of product Gamma:
Planned level of production | 5,000 units |
Actual level of production | 5,050 units |
Direct materials purchased | 22,000 pounds |
Cost of direct materials purchased | $226,600 |
Direct materials placed into production | 19,900 pounds |
Direct labor incurred | 10,200 hours |
Actual direct labor cost | $151,470 |
Actual variable overhead cost | $12,240 |
Actual fixed overhead cost | $73,440 |
Compute the Fixed Overhead volume variance for the month.
-
$800 F
-
$720 F
-
$720 U
-
$800 U
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