The Standard Factory Overhead Rate Is $7 What Is the Amount of the Fixed Factory Overhead Volume

question 39

Multiple Choice

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: $\begin{array}{lll}\$ 360,000 & \text { Variable factory overhe ad } & \text { Actual } \\104,000 & \text { Fixed factory overhead } & \\450,000 & 60,000 \text { hours at } \$ 7.50 & \text { Standard: }\end{array}$
What is the amount of the fixed factory overhead volume variance?

• A) $26,000 unfavorable
• B) $12,000 favorable
• C) $26,000 favorable
• D) $12,000 unfavorable

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Definitions:

Total Revenue

The overall amount of money generated by a business from the sale of its products or services, calculated by multiplying the price per unit by the number of units sold.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.

Profit-maximizing

Profit-maximizing is the process or goal of a business to operate in a way that achieves the highest possible profit.

Total Revenue

The total amount of money received by a company from its sales or services before any expenses are subtracted.