Nanjones Company manufactures a line of products distributed nationally through wholesalers. Presented below
are planned manufacturing data for Year 1 and actual data for November Year 1. The company applies overhead
based on planned machine hours using a predetermined annual rate.
Year 1 Planning Date
Annual November
Fixed manufacturing overhead $1,200,000 $100,000
Variable manufacturing overhead 2,400,000 220,000
Direct labor hours 48,000 4,000
Machine hours 240,000 22,000
Data for November Year 1
Direct labor hours (actual) 4,200
Direct labor hours (plan based on output) 4,000
Machine hours (actual) 21,600
Machine hours (plan based on output) 21,000
Fixed manufacturing overhead $101,000
Variable manufacturing overhead $214,000
Question CPA-03850 The fixed overhead volume variance for November Year 1 was:
a. $1,200 unfavorable.
b. $5,000 unfavorable.
c. $5,000 favorable.
d. $1,200 favorable.
Explanation
Choice “c” is correct. $5,000 favorable.
Can anyone explain how to do OH volume variance in a more understandable manner? Becker explanation was not very good.
.