The Hoffman Company uses an absorption$-$costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $$3\mathrm{.}00$ per unit and

other variable manufacturing costs of $$1\mathrm{.}40$ per unit. The standard production rate is $20$ units per machine$-$hour. Total budgeted and actual fixed manufacturing

overhead costs are $$525,000.$ Fixed manufacturing overhead is allocated at $$14$ per machine$-$hour based on fixed manufacturing costs of $$525,00037,500$

machine$-$hours, which is the level Hoffman uses as its denominator level. The selling price is $$12$ per unit. Variable operating $($nonmanufacturing$)$ cost$,$ which is driven

by units sold, is $$2$ per unit. Fixed operating $($nonmanufacturing$)$ costs are $$160,000.$ Beginning inventory in $2020$ is $35,000$ units; ending inventory is $40,000$ units.

Sales in $2020$ are $685,000$ units. The same standard unit costs persisted throughout $2019$ and $2020.$ For simplicity, assume that there are no price, spending, or

efficiency variances.

Read the requirements.

Requirement $4.$ Graph how fixed manufacturing overhead is accounted for under absorption costing. That is$,$ there will be two lines: one for the budgeted fixed

manufacturing overhead $($which is equal to the actual fixed manufacturing overhead in this case$)$ and one for the fixed manufacturing overhead allocated. Show

the production$-$volume variance in the graph.

Begin by drawing two lines: one for the budgeted fixed manufacturing overhead and one for the fixed manufacturing overhead allocated. Next shade the areas, by

selecting the region shading tool, that would represent the favorable and unfavorable production$-$volume variance areas. Lastly, label the two lines and two shaded

areas. $($Enlarge the graph to medium size and use the line tool and region shading tool buttons displayed to draw the graph.$)$

Click the graph, choose a tool in the palette and fol...