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MAFixed production overhead capacity variance

Dddnguyen10y ago
Hi Tutors, could you help me with this question? A manufacturing company operates a standard absorption costing system. Last month 25,000 production hours were budgted fixed production overhead cost was 125,000. Last month the actual hours worked were 24,000 and the standard hours for actual production were 27,000. What was the fixed production overhead capacity variance for last month? A. $5.000 Adverse B. $5.000 Favourable C. $10.000 Adverse D. $10.000 Favourable Thanks a lot
John MoffatJohn MoffatTutor10y ago#1
You must ask in the Ask the Tutor Forum if you wish for me to answer. This forum is for students to help each other :-)
JJegan9y ago#2
ddnguyen The fixed production overhead capacity variance = AHxSR = 24000 x (125000/25000) = 120000 BHxSR = 125000 (given in question) Therefore the capacity variance = (AHxSR) - (BHxSR) = 120000-125000 = $5000 Adverse.
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