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During 2022, Sheridan Corp. produced 27,000 units and sold 27,000 for $14.00 per unit. Variable manufacturing costs were $4.00 per unit. Annual fixed manufacturing
During 2022, Sheridan Corp. produced 27,000 units and sold 27,000 for $14.00 per unit. Variable manufacturing costs were $4.00 per unit. Annual fixed manufacturing overhead was $54,000 ($2.00 per unit). Variable selling and administrative costs were $2.00 per unit sold, and fixed selling and administrative expenses were $36,000. Suppose the accountant for Sheridan Corp, uses normal-absorption costing and uses the budgeted volume of 45,000 units to allocate the fixed overhead rather than the actual production volume of 27.000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.
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