Question

n Corporation budgeted fixed manufacturing costs of $34,000 during 2020. Other information for 2020​ includes: The budgeted denominator level is 2,000 units. Units produced total 1,800 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. The production−volume variance is​ ________. (Round any intermediary calculations to the nearest cent and your final answer to the nearest​ dollar.)

Answer 1

Answer:

The answer is "$\ 3,400$"

Explanation:

Using formula:

$\text{Production Volume Variance = Budgeted O/H cost -Absorbed cost}$

$\text{Budgeted O/H cost} = 34000\\\\\text{O/H Rate = Bdt OH/Bdt units}$

                $= \frac{34000}{2000}\\\\= \frac{34}{2} \\\\ = 17$

$\text{Absorbed cost }= 1800\ units \times 17 \ = 30,600\\\\Variance = 34,000 -30,600 = 3,400$