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The Blossom manufactures double-sided pens-a pen on one side, a highlighter on the other. As the accounting manager, Shade is responsible for presenting three
The Blossom manufactures double-sided pens-a pen on one side, a highlighter on the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year- end. Team members are very familiar with absorption costing, as they have been evaluating gross margin amounts and percentages for years. They are less keen on how fixed-MOH impacts the income statement, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variance is written off to COGS. Theoretical level Practical level Normal level 78,000 units 46,800 units 39,000 units Actual production 60,700 units Sales volume 60,000 units Budgeted fixed-MOH cost $234,000 Budgeted DM cost $2.06 per unit Budgeted DL cost $1.20 per unit Budgeted variable-MOH cost $0.30 per unit Selling price $14.00 per unit Calculate the fixed-MOH volume variance for each possible capacity level this year; specify amount and sign. Fixed-MOH Volume Variance Theoretical $ Practical $ Normal Unfavorable Favorable +A $ Favorable Sign
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