Use the following information to answer questions 1 and 2
Heart Ltd. applies overhead on the basis of machine hours. One and oneâ?half (1.5) machine hours are required for each unit of product. The master budget showed planned production of 6,000 units for the upcoming period, with manufacturing overhead budgeted at $205,200 of which 25% is fixed. Actual results for the period were 6,150 units produced, with 10,100 machine hours used. Actual overhead costs were $158,500 variable and $57,000 fixed.
1. Based on the information provided for Heart Ltd. what is the fixed overhead production volume variance for the period?
a. $1,282 U
b. $4,987 U
c. $5,130 U
d. $1,282 F
e. $4,987 F
2. Based on the information provided for Heart Ltd. what is the over or under applied overhead for the period?
a. $ 182 Under applied
b. $5,170 Under applied
c. $10,300 Over applied
d. $14,780 Over applied
e. $25,080 Over applied
1. Production volume variance = Applied Fixed Overhead - Budgeted Fixed overhead
Fixed overhead = 205,200 X 25% = ...
The solution explains how to calculate the production volume variance and under or over applied overhead