Question

2,400 (allocated overhead - flexible budget)

a) Actual Costs Incurred: 63,916
b) Same budgeted lump sum regardless of output level: 62,400
c) Flexible Budget: same budgeted lump sum regardless of output level: 62,400
d) Allocated Overhead: 64,800 (15 from below * budgeted labor hour * actual units started and completed)
Budgeted fixed overhead per unit: 15 (fixed overhead costs / (Budgeted labor hour*budgeted output))

Spending Variance: 1,516 U (actual costs incurred - flexible budget)

Answer 1

The average fixed cost curve is a downward sloping, U-shaped curve. Spreading the overhead refers to dividing the fixed cost by the quantity of output produced to allocate it evenly.

Step-by-step explanation:

The average fixed cost curve is a downward sloping, U-shaped curve. At low levels of output, the average fixed cost will be high because the fixed cost is spread over a smaller quantity of output.

As output increases, the average fixed cost decreases as the fixed cost is spread over a larger quantity of output. Spreading the overhead refers to the idea of dividing the fixed cost by the quantity of output produced so that it is allocated evenly across the units produced.