Question

Auditory Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 13,000 Actual fixed overhead incurred: $742,000 Standard fixed overhead rate: $15 per hour Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 48,000 If Auditory estimates four hours to manufacture a completed unit, the company's fixed-overhead budget variance would be:

Answer 1

$22,000 unfavorable

Step-by-step explanation:

Calculation to determine the company's fixed-overhead budget variance would be:

Using this formula

Fixed-overhead budget variance=Actual fixed overhead incurred-Budgeted fixed overhead

Let plug in the formula

Fixed-overhead budget variance=$742,000 – 720,000

Fixed-overhead budget variance = $22,000 unfavorable

Therefore the company's fixed-overhead budget variance would be:$22,000 unfavorable