Question
Please show detailed help with steps and solution, there is only one question here, so please don't report it for multiple questions : Eastern Company
Please show detailed help with steps and solution, there is only one question here, so please don't report it for multiple questions :
Eastern Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours (DLHs). The denominator activity level is 60,000 direct labor-hours, or 300,000 units.The capacity is 400,000 units or 80,000 labor hours A standard cost card for the company's product follows :
Direct Materials : Standard Quantity or Hours : 0.25 Kilogram Standard Price or Rate : $16 per kilogram Standard Cost :$4
Direct Labor : Standard Quantity or Hours : 0.20 Direct Labor Hours Standard Price or Rate : $10 per direct labor hour
Standard Cost : $2
Variable Overhead : Standard Quantity or Hours : 0.20 Direct Labor Hours Standard Price or Rate : $5 per direct labor hour Standard Cost : $1
Fixed Overhead : Standard Quantity or Hours : 0.20 Direct Labor Hours Standard Price Or Rate : $10 per direct labor hour Standard Cost : $2
Actual data for the year follow:
Units produced and sold ................................................. 330,000
Actual direct labor-hours worked ................................... 64,800
Actual variable manufacturing overhead cost .................. $327,240
Actual fixed manufacturing overhead cost ..................... $612,000
Question : Compute the fixed overhead volume variance
Answer was -60,000 Favorable but I don't get how or why
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