Shiplett Corporation Applies Overhead to Products Based on Machine-Hours

question 24

Essay

Shiplett Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,800 machine-hours. The budgeted fixed manufacturing overhead costs are $317,680. In March, the actual fixed manufacturing overhead costs were $314,300 and the standard machine-hours allowed for the actual output were 8,500 machine-hours.
Required:
a. Compute the budget variance for March. Show your work!
b. Compute the volume variance for March. Show your work!

---

Definitions:

Domestic Consumption

The total amount of goods and services consumed within a country.

Indebtedness

The condition of owing money or being under financial obligation.

Economy Recovers

The process by which an economy returns to a state of growth or improves in its indicators after a period of recession or decline.

Trade Deficit

Occurs when a country's imports exceed its exports during a given time period, indicating an outflow of domestic currency to foreign markets.