Cheshire, Inc

question 73

Essay

Cheshire, Inc. allocates fixed overhead at a rate of $18 per direct labor hour. This amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During May, Cheshire produced 5,500 units. Budgeted fixed overhead is $66,000, and overhead incurred was $67,000.
Required:
Determine the volume variance for May.

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Definitions:

Federal Budget Deficit

The shortfall in the federal government's budget when its expenditures surpass its revenues.

National Debt

The total amount of money that a country’s government has borrowed by issuing securities, usually through selling bonds.

Federal Receipts

Revenues collected by the federal government, primarily through taxes, but also including other sources such as customs duties and earnings from the Federal Reserve's operations.

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.