Question

A manufacturing company has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity 6,500 DLHs Overhead costs at the denominator activity level: Variable overhead cost $ 35,750 Fixed overhead cost $ 71,500 The following data pertain to operations for the most recent period: Actual hours 6,700 DLHs Standard hours allowed for the actual output 6,370 DLHs Actual total variable manufacturing overhead cost $ 39,000 Actual total fixed manufacturing overhead cost $ 70,560 The fixed manufacturing overhead budget variance for the period is closest to:

Answer 1

Answer:

$940 Favorable

Explanation:

Fixed manufacturing overhead budget Variance = Budgeted fixed overhead cost - Actual total fixed manufacturing overhead cost

Fixed manufacturing overhead budget Variance = $71,500 - $70,560

Fixed manufacturing overhead budget Variance = $940 F

So, the fixed manufacturing overhead budget variance for the period is closest to $940 F