Question

Wave Fashions uses standard costs for its manufacturing division. The allocation base for overhead costs is direct labor hours. From the following​ data, calculate the total fixed overhead variance.Actual fixed overhead $ 32,000Budgeted fixed overhead $ 26,000Allocated fixed overhead $ 28,350Standard overhead allocation rate $ 6.75Standard direct labor hours per unit 2.1 DLHrActual output2,000 unitsA.$ 3,650 FB.$ 3,650 UC.$ 13,500 FD.$ 13,500 U

Answer 1

Answer:

B. $ 3,650 U

Explanation:

Wave Fashions

Actual fixed overhead $ 32,000

Budgeted fixed overhead $ 26,000

Allocated fixed overhead $ 28,350

Standard overhead allocation rate $ 6.75

Standard direct labor hours per unit 2.1 DLHr

Actual output 2,000 units

Total Fixed Overhead Variance =  Budget Variance + Volume Variance

                                                 =$ 6000 Unfav - $ 2350 Fav= $ 3650 Unfavorable

Budget Variance = Actual Fixed Overhead- Budgeted Fixed Overhead= $ 32,000- $ 26,000= $ 6000 unfavorable

Volume Variance = Budgeted Fixed Overhead- Allocated Fixed Overhead

Volume Variance= $ 26000-  ( Standard Fixed Overhead Rate * Standard Hours)

Volume Variance= $ 26000-  ( $ 6.75 * 2.1 * 2000)

Volume Variance= $ 26000- 28350 = 2350 favorable