Question

Chong Corporation recently prepared a manufacturing cost budget for an output of 52,000 units, as follows: Direct materials $ 104,000 Direct labor 52,000 Variable overhead 78,000 Fixed overhead 104,000 Actual units produced amounted to 62,000. Actual costs incurred were: direct materials, $114,000; direct labor, $62,000; variable overhead, $104,000; and fixed overhead, $98,000. If Chong evaluated performance by the use of a flexible budget, a performance report would reveal a total fixed variance of: (Round intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.) rev; 05_11_2012

Answer 1

Answer:

Total  fixed overhead variance:                                       $

Standard fixed overhead cost ($2 x 62,000 units)  124,000

Less: Actual fixed overhead cost                               98,000

Total fixed overhead cost                                           26,000(F)

Fixed overhead rate = Budgeted fixed overhead cost

                                               Budgeted output

                                   = $104,000

                                       52,000 units

                                    = $2 per unit

Explanation:

Total fixed overhead variance is the difference between standard fixed overhead cost  and actual fixed overhead cost. Standard fixed overhead cost is equal to standard fixed overhead rate multiplied by actual output.