ECONOMICS

Detailed explanation-1: -Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).

Detailed explanation-2: -Fixed manufacturing overhead applied is the amount of fixed production costs that have been charged to units of production during a reporting period. If the overhead application rate is based on actual fixed costs incurred, then the amount of overhead applied should match the amount incurred.

Detailed explanation-3: -11-11 In a standard cost system both a budget variance and a volume variance are computed for fixed manufacturing overhead cost. 11-12 The fixed overhead budget variance is the difference between total budgeted fixed overhead cost and the total amount of fixed overhead cost incurred.

Detailed explanation-4: -Fixed overhead costs are constant and do not vary as a function of productive output, including items like rent or a mortgage and fixed salaries of employees. Variable overhead varies with productive output, such as energy bills, raw materials, or commissioned employees’ pay.