Question

Teall Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 8,700 MHs Actual level of activity 8,800 MHs Standard variable manufacturing overhead rate $ 5.90 per MH Budgeted fixed manufacturing overhead cost $ 52,000 Actual total variable manufacturing overhead $ 53,600 Actual total fixed manufacturing overhead $ 56,200 What was the fixed manufacturing overhead budget variance for the month?
Multiple Choice a. $4,200 Unfavorable b. $590 Unfavorable c. $590 Favorable d. $4,200 Favorable

Answer 1

Answer:

Option A,$4,200 is the correct option to the question

Explanation:

The fixed manufacturing overhead budget for the month is the difference between budgeted fixed manufacturing  overhead cost and actual fixed manufacturing overhead cost for the month as shown by the computation below:

Fixed manufacturing overhead budget variance =$52,000-$56,200=-$4,200

The variance is an unfavorable since the actual overhead cost of $56,200 outweighs the budgeted cost of $52,000,hence the correct option is A