Final answer:
The fixed cost spending variance for Benson Company is $19,400 unfavorable, as the actual fixed overhead costs were higher than the budgeted amount. This variance results from actual costs of $195,800 exceeding the budgeted costs for the actual output of $176,400.
Step-by-step explanation:
The student wants to determine the fixed cost spending variance for Benson Company. The predetermined fixed overhead cost rate is $28 per unit of product. Expected production was 6,700 units, but actual production was only 6,300 units. The actual fixed overhead costs amounted to $195,800. To find the spending variance, we compare the budgeted fixed costs to the actual fixed costs. Budgeted fixed costs for the actual output would be the overhead cost rate times the actual output, i.e., $28 per unit * 6,300 units which equals $176,400. The spending variance is the difference between this budgeted cost for actual output and the actual fixed overhead costs. So, the fixed cost spending variance is $195,800 (actual) - $176,400 (budgeted) resulting in a variance of $19,400 unfavorable (U), since the actual costs were higher than the budgeted costs.
Spreading the overhead refers to the distribution of fixed costs across units produced. As output increases, the average fixed cost decreases because the same total fixed cost is spread over more units. If we suppose the fixed cost is $1,000, the average fixed cost curve would show a hyperbolic shape, decreasing as the quantity of output produced increases. This behavior highlights the efficiency gains from producing at a larger scale and explains why the curve slopes downward.