Problem:
1. ABC Manufacturing uses a standard costing system. It applies overhead to products based on machine-hours. Data for the year are as follows:
|
Total budgeted fixed overhead
|
$300,000
|
|
Actual fixed overhead costs incurred
|
$275,000
|
|
Total budgeted (denominator) machine-hours
|
50,000
|
|
Actual machine-hours
|
54,000
|
|
Standard machine-hours allowed for the actual output
|
52,000
|
Required: Compute the fixed portion of the predetermined overhead rate for the year. Compute the fixed overhead budget and volume variances.