(Solution) - Standard and actual cost data for Willey Corporation for the -(2025 Original AI-Free Solution)

Paper Details

Standard and actual cost data for Willey Corporation for the first three quarters of the year are shown below.
Standards:
Machine hours per unit produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0
Units produced per quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Fixed manufacturing overhead per quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$325,000

Required:
1. Compute the fixed overhead budget variance for each quarter.
2. Compute the volume variance for each quarter.
3. Interpretive Question: At the end of the third quarter, the production manager at Willey Corporation believes that favorable volume variance in the third quarter means that he has more money to spend in production. Explain to the production manager what the volume variance represents and why it does not indicate that there is more money to spend inproduction.