Question
World Company expects to operate at 80% of its productive capacity of 51,250 units per month. At this planned level, the company expects to use
World Company expects to operate at 80% of its productive capacity of 51,250 units per month. At this planned level, the company expects to use 24,600 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate based on direct labor hours. At the 80% capacity level, the total budgeted cost includes $51,660 fixed overhead cost and $273,060 variable overhead cost. In the current month, the company incurred $306,000 actual overhead and 21,600 actual labor hours while producing 35,000 units.
(1) | Compute the overhead volume variance. |
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