# CMA Study Group

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## Fixed overhead production volume variance. #### Ron Thomas27 days ago  #### Hany Salman26 days ago #### Kishore Kumar Natakala26 days ago #### Ron Thomas26 days ago #### Kishore Kumar Natakala26 days ago #### Sura Hitesh24 days ago  #### Shah Mahmood Musakhil25 days ago #### Sura Hitesh25 days ago  #### MURALIDHARAN L3 days ago • #### 1.  Fixed overhead production volume variance.

Posted 27 days ago

A company ends the month with a volume variance of \$6,360 unfavorable. If budgeted fixed O/H
was \$480,000, O/H was applied on the basis of 32,000 budgeted machine hours, and budgeted variable O/H was
\$170,000, what were the actual number of machine hours (AH) for the month?
A. 32,425
B. 32,318
C. 32,000
D. 31,576

Anyone please help me understand this question. While I do the calculation according to the formula I'm getting 31,576 as the standard hours. But the answer shows 31576 as the actual hours. Help me please understand the question.

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Ron Thomas
India
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• #### 2.  RE: Fixed overhead production volume variance.

Posted 26 days ago

Fixed overhead production volume variance =( AH-SH)*SP
6,360 = (AH-32000) 15 per H

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Director/Manager
Doha
Qatar
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• #### 3.  RE: Fixed overhead production volume variance.

Posted 26 days ago

A. 32,425
production volume variance = fixed overhead budget - ( rate )x actual hour
-6360 = 480000-15xa
-6360= 48000-15a
-6360-480000= -15a
-486360/15 =a
a= 32425

• #### 4.  RE: Fixed overhead production volume variance.

Posted 26 days ago

Hi ,
Given Volume variance Unfavorable \$6,360/-.
Thus, in terms of Hours it is 6,360/15 = 424 hours.
given, budgeted machine hours 32,000  and hence, The SH allowed for actual production (SH) will be 31,576  [ i.e.32,000-424 hours ]

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Kishore Kumar N
Bengaluru
Karnataka
India
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• #### 5.  RE: Fixed overhead production volume variance.

Posted 26 days ago

The question has asked for actual hours, not standard hours which is what is confusing me.

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Ron Thomas
India
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• #### 6.  RE: Fixed overhead production volume variance.

Posted 26 days ago
Hi,
I have one point to ask here to you.
Do you have to use Actual hours used in calculating the volume variance?
It is for the actual production units the standard hours allowed for that actual production is used in the formula.I.e. SH.
Here,SH in the formula  means standard hours used for actual production units..
Thanks

• #### 7.  RE: Fixed overhead production volume variance.

Posted 24 days ago
(actual hrs - standard hrs) = 424
actual hrs = 424+32000
so according to equation it will be 32424
but why should we reduce it , and as they have mentioned in question its unfavourable actual hrs should atleast be more than 32000,how come its 31576

• #### 8.  RE: Fixed overhead production volume variance.

Posted 21 days ago
Yes

• #### 9.  RE: Fixed overhead production volume variance.

Posted 25 days ago

480000+6360= 486360 / 15 fixe OH rate = 32425 hours

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Shah Mahmood Musakhil
Student
Elkridge MD
United States
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• #### 10.  RE: Fixed overhead production volume variance.

Posted 25 days ago
as they have mentioned its unfavourable ,so actual hours used will be atleast above 32000 , how come its 31576, if its 31576 it would be favourable.

• #### 11.  RE: Fixed overhead production volume variance.

Posted 25 days ago

• #### 12.  RE: Fixed overhead production volume variance.

Posted 3 days ago
Hi Ron

Your doubt is correct.  The question should have been standard hours and not actual hours.  Volume variance helps to compare Standard hours for actual production and the Budgeted hours for the period.

CA L.Muralidharan
6383228202
Chennai

• #### 13.  RE: Fixed overhead production volume variance.

Posted 2 days ago

 Spending Variance SR( AQ-SQ) -6360 15(X-32000) -424 X-32000 X 31576 SR Fixed 480,000 15 Budget Capacity 32000

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