Question

Hockey Accessories Corporation manufactured 21 comma 600 duffle bags during March. The following fixed overhead data pertain to​March: Actual Static Budget Production 21 comma 600 units 22 comma 000 units Machineminushours 1 comma 150 hours 2 comma 200 hours Fixed overhead costs for March $ 84 comma 200 $ 92 comma 400 What is the amount of fixed overhead spending​ variance?

A. $ 6 comma 520 favorable
B. $ 6 comma 520 unfavorable  
C. $ 8 comma 200 unfavorable
D. $ 8 comma 200 favorable

Answer 1

D) $8,200 favorable

Step-by-step explanation:

Hockey Accessories Corporation manufactured 21,600 duffle bags during March. The following data pertain to ​March:

Actual Static Budget

Production 21,600 units 22,000 units

Machine hours 1,150 hours 2,200 hours

Fixed overhead costs $ 84,200 $ 92,400

What is the amount of fixed overhead spending​ variance?

Hockey Accessories Corporation estimated its fixed overhead costs at $92,400, but the actual overhead costs were only $84,200. The difference between estimated and actual costs is $8,200 favorable variance (= $92,400 - $84,200) since the fixed overhead costs were lower than estimated.