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Acme Company's production budget for August is 19,500 units and includes the following component unit costs:
- Direct materials: [tex]$\$[/tex]8.00$
- Direct labor: [tex]$\$[/tex]12.00$
- Variable overhead: [tex]$\$[/tex]6.00$

Budgeted fixed overhead is [tex]$\$[/tex]52,000$. Actual production in August was 21,450 units. Actual unit component costs incurred during August include:
- Direct materials: [tex]$\$[/tex]10.20$
- Direct labor: [tex]$\$[/tex]11.40$
- Variable overhead: [tex]$\$[/tex]7.20$

Actual fixed overhead was [tex]$\$[/tex]55,500[tex]$. The standard fixed overhead application rate per unit consists of $[/tex]\[tex]$2.60$[/tex] per machine hour, and each unit is allowed a standard of 1 hour of machine time.

Required:
Calculate the fixed overhead budget variance and the fixed overhead volume variance.

Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).

[tex]\[
\begin{tabular}{|l|l|l|}
\hline
Fixed overhead budget variance & & U \\
\hline
Fixed overhead volume variance & & F \\
\hline
\end{tabular}
\][/tex]

Sagot :

GinnyAnswer
Let's take a step-by-step approach to calculate the fixed overhead budget variance and the fixed overhead volume variance for Acme Company, and indicate their effects (favorable or unfavorable).

### Step 1: Understand the Given Data
- Budgeted Production: 19,500 units
- Actual Production: 21,450 units
- Budgeted Fixed Overhead: \$52,000
- Actual Fixed Overhead: \$55,500
- Standard Fixed Overhead Application Rate: \$2.6 per unit (each unit corresponds to 1 machine hour)

### Step 2: Calculate the Fixed Overhead Budget Variance
The formula for the Fixed Overhead Budget Variance is:
[tex]\[ \text{Fixed Overhead Budget Variance} = \text{Actual Fixed Overhead} - \text{Budgeted Fixed Overhead} \][/tex]
Using the given data:
[tex]\[ \text{Fixed Overhead Budget Variance} = \[tex]$55,500 - \$[/tex]52,000 = \$3,500 \][/tex]

Next, we determine if this variance is favorable (F) or unfavorable (U). Since the actual fixed overhead (\[tex]$55,500) is higher than the budgeted fixed overhead (\$[/tex]52,000), the variance is unfavorable (U).

### Step 3: Calculate the Fixed Overhead Volume Variance
The formula for the Fixed Overhead Volume Variance is:
[tex]\[ \text{Fixed Overhead Volume Variance} = (\text{Actual Production} - \text{Budgeted Production}) \times \text{Standard Overhead Rate} \][/tex]
Using the data:
[tex]\[ \text{Fixed Overhead Volume Variance} = (21,450 - 19,500) \times \$2.6 \][/tex]
[tex]\[ \text{Fixed Overhead Volume Variance} = 1,950 \times \$2.6 \][/tex]
[tex]\[ \text{Fixed Overhead Volume Variance} = \$5,070 \][/tex]

Next, we determine if this variance is favorable (F) or unfavorable (U). Since the actual production (21,450 units) is higher than the budgeted production (19,500 units), and we are applying a standard rate, the variance results in more efficient use of fixed overhead. Therefore, the variance is favorable (F).

### Summary of Variances
[tex]\[ \begin{array}{|l|l|l|} \hline \text{Fixed overhead budget variance} & \$3,500 & \text{U} \\ \hline \text{Fixed overhead volume variance} & \$5,070 & \text{F} \\ \hline \end{array} \][/tex]

In conclusion:
- The Fixed Overhead Budget Variance is \$3,500 and it is unfavorable (U).
- The Fixed Overhead Volume Variance is \$5,070 and it is favorable (F).
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