Question

Dellarocco Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted fixed manufacturing overhead $ 355,740 Budgeted hours 49,000 labor-hours Actual fixed manufacturing overhead $ 372,740 Actual hours 45,600 labor-hours The fixed overhead budget variance is:
Multiple Choice
a. $17,000 U
b. $17,000 F
c. $37,328 U
d. $37,328 F

Answer 1

Answer:

Option (a) $17,000 U

Explanation:

Data provided in the question:

Budgeted fixed manufacturing overhead = $355,740

Budgeted hours = 49,000 labor-hours

Actual fixed manufacturing overhead = $372,740

Actual hours = 45,600 labor-hours

Now,

The fixed overhead budget variance

= Budgeted fixed manufacturing overhead - Actual fixed manufacturing overhead

= $355,740 - $372,740

= - $17,000

Here negative sign mean the Unfavorable

Hence,

Option (a) $17,000 U