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Kubrick uses a standard absorption costing system to control the cost of its only product.The flexed budget for production overhead for the company shows a budget total overhead cost of $200000 per period when 5000 tonnes are produced and $264000 per period when 9000 tonnes are produced .
in period 9,when the actual output was 6500 tonnes,total actual overhead cost was $245000($125000 fixed and $120000 variable).The standard fixed overhead absorption rate is $24 per tonne.
what is the fixed overhead volume variance?..My answer is (6500 tonnes-9000 tonnes)=2500 tonnes at the standard rate $24=60000$(f)….The kit answer was {(6500x$24)$156000-$120000}=$36000(f)….Why is the difference?
In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
The fixed overhead volume variance is calculated by looking at the difference between the actual production and the budget production, and multiplying the difference by the standard OAR.
(6,500 – 5,000) x $24 = $36,000.
It will help you to watch my free lectures on variances.
The lectures are a complete free course and cover everything needed to be able to pass the exam well.
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