Question

Auditory Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 13,000 Actual fixed overhead incurred: $742,000 Standard fixed overhead rate: $15 per hour Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 48,000 If Auditory estimates four hours to manufacture a completed unit, the company's fixed-overhead budget variance would be: $60,000 unfavorable. $22,000 unfavorable. $60,000 favorable. None of the answers is correct. $22,000 favorable.

Answer 1

Answer:

$22,000 unfavorable

Explanation:

Auditory Company

Actual units produced: 13,000  

Actual fixed overhead incurred: $742,000  

Standard fixed overhead rate: $15 per hour  

Budgeted fixed overhead: $720,000  

Planned level of machine-hour activity: 48,000  

 

Fixed Budget Overhead Variance = Actual Fixed Overhead - Budgeted Fixed Overhead

Fixed Budget Overhead Variance =  $742,000 -$720,000 = $ 22,000 unfavorable