Question
Required information [The following information applies to the questions displayed below.] Patel and Sons Inc. uses a standard cost system to apply factory overhead
Required information [The following information applies to the questions displayed below.] Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 53,100 machine hours per year, which represents 26,550 units of output. Annual budgeted fixed factory overhead costs are $265,500 and the budgeted variable factory overhead cost rate is $3.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,500 units, which took 42,100 machine hours. Actual fixed factory overhead costs for the year amounted to $257,100 while the actual variable overhead cost per unit was $2.90. Based on the information provided above, what was (a) the fixed overhead spending (budget) variance for the year, and (b) the production volume variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round final answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. (a) Spending (budget) variance $ 8,400 Favorable (b) Production volume variance $ 1,650 Unfavorable
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started