Question

Deocomfort Corporation manufactured 55,500 door jambs during September. The following fixed overhead data relates to September:

Actual Static Budget
Production 55,500 units 55,000 units
Machine-hours 985 hours 1,100 hours
Fixed overhead costs for September $50,500 $50,600

10) What is the flexible-budget amount?
A) $50,500
B) $51,060
C) $50,600
D) $55,500

11) What is the amount of fixed overhead allocated to production?
A) $51,060
B) $50,500
C) $50,600
D) $55,500

12) What is the fixed overhead spending variance?
A) $560 unfavorable
B) $100 favorable
C) $100 unfavorable
D) $560 favorable

Answer 1

The flexible-budget amount is $51,060. The amount of fixed overhead allocated to production is $51,060. The fixed overhead spending variance is $100 unfavorable.

Step-by-step explanation:

The flexible-budget amount can be calculated by multiplying the actual production (55,500 units) by the fixed overhead cost per unit in the static budget. In this case, the fixed overhead cost per unit in the static budget is $50,600/55,000 = $0.92. Therefore, the flexible-budget amount is 55,500 units x $0.92 = $51,060.

The amount of fixed overhead allocated to production is the same as the flexible-budget amount, which is $51,060.

The fixed overhead spending variance can be calculated by subtracting the fixed overhead in the static budget ($50,600) from the actual fixed overhead cost ($50,500). Therefore, the fixed overhead spending variance is $50,500 - $50,600 = $100 unfavorable.