FMOH variance - *First find FMOH rate = budgeted FMOH...

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Macon had budgeted to make 200,000 hand-painted dog bowls in 2009. Each bowl should take 3 hours to make and he budgeted for $3,200,000 in FMOH. Turns out in this economy, people feel they can get by w/o such luxuries and he only made 150,000 bowls and incurred $3,100,000 of FMOH. What is his FMOH budget variance? What is his FMOH volume variance? Budget Variance Spent Budget $3,100,000 $3,200,000 $100,000 F Volume Variance Budget Standard @ Actual $3,200,000 $2,398,000 ** $801,500 U Unfavorable because you made fewer than you expected
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Unformatted text preview: **First find FMOH rate = budgeted FMOH cost/budgeted DLH $3,200,000/(200,000 bowls @ 3 hours each) = $5.33 Then find how much you would have applied given actual production level= 150,000 bowls X 3 DLH 450,000 X 5.33 (FMOH rate) $2,398,500 If you are off by a little bit here it is probably a rounding error since the FMOH rate is actually $5.33333; if you leave this in your calculator and keep going, it will create a small rounding issue....
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