[john12321]

A company uses a standard absorption costing system and uses a fixed overhead absorption rate based on machine hours. In order to calculate the fixed overhead volume variance which of the following do you need to know:

the budgeted fixed overheads
the budgeted machine hours and budgeted units produced
the actual fixed overheads incurred
the actual units produced
the variance of incurred machine overhead costs for the output produced

and

MX1uses absorption costing for the recovery of overheads based on budgeted machine hours. It produces one type of product only. The budget and actual performance for the month of May was as follows.

Budget Actual

Overheads £2,400,000 £2,480,000

Labour Hours 85,000 83,000

Machine Hours 40,000 42,000

Output in Units 60,000 62,000

What was the total Fixed Overhead Variance for May?

A.
£0.00

B.
£28.23

C.
£72.60

D.
£63.50

thanks in advance for your help 🙂

[Author]

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