If fixed overhead allocated for actual output units is $25000 and the production volume variance is $9000, then budgeted fixed overhead will be _____________?
Correct answer: A. $34,000
- A. $34,000
- B. $24,000
- C. $16,000
- D. $18,000
Explanation
Production volume variance is the difference between budgeted fixed overhead and fixed overhead applied to actual output. Therefore, budgeted fixed overhead is $25,000 + $9,000 = $34,000, assuming the stated variance is an unfavorable shortfall in applied overhead.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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