Question

Skizone Company's 4-Variance Analysis:

------------------spend. var.-----eff var.------pro. vol. var.
variable OH------$6,500F-----$12,000U--------No Var.--
fixed OH-------------(a)---------No var.--------$46,000 U

6) If Skizone's combined 4-Variance Analysis shows an unfavorable spending variance of $2,300, what is the fixed overhead spending variance (a)?
A) $8,800 favorable
B) $4,200 unfavorable
C) $8,800 unfavorable
D) $4,200 favorable

7) Which of the following statements is true of Skizone's overhead variances?
A) Budgeted variable overhead rate is higher than actual variable overhead rate.
B) Static fixed overhead amount is higher than flexible fixed overhead amount.
C) Budgeted variable overhead rate is lower than actual variable overhead rate.
D) Static fixed overhead amount is lower than flexible fixed overhead amount

Answer 1

For question 6, the fixed overhead spending variance (a) is $4,200 unfavorable. For question 7, the true statement about Skizone's overhead variances is that (B) the static fixed overhead amount is higher than the flexible fixed overhead amount.

Step-by-step explanation:

Question 6:

To find the fixed overhead spending variance (a), we need to subtract the other variance components from the total unfavorable spending variance of $2,300. According to the 4-Variance Analysis, the spending variance consists of spending variance, efficiency variance, and no variance.

The variable overhead spending variance is $6,500 favorable and the efficiency variance is $12,000 unfavorable, leaving us with an unfavorable spending variance of $2,300. Since there is no variance for fixed overhead, the fixed overhead spending variance (a) would be $2,300 - $6,500 = $4,200 unfavorable.

Question 7:

Looking at the information provided, we know that the only variance component for fixed overhead is no variance. Therefore, the statement that is true of Skizone's overhead variances is B) Static fixed overhead amount is higher than flexible fixed overhead amount.