Posted: July 12th, 2016

Calculate the overhead volume variance, and discuss the meaning?

Printers Inc. manufactures and sells a mid-volume color printer (MC) and a high-volume color printer (HC). Each MC requires 100 direct labor hours to manufacture, and each HC requires 150 direct labor hours. At the beginning of the year, 700 MCs are scheduled for production and 500 HCs are scheduled. At the end of the year, 720 MCs and 510 HCs were produced. Fourteen hundred too many hours were used in producing MCs and 3,000 hours fewer than standard were used to manufacture HCs. The flexible overhead budget is $2.9 million of fixed costs and $10 per direct labor hour.

a. Calculate budgeted volume.
b. Calculate standard volume.
c. Calculate actual volume.
d. Calculate the overhead rate.
e. Calculate the overhead volume variance, and discuss the meaning.

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