Question

Actual machine hours 905 Standard machine hours allowed 1,030 Denominator activity (machine hours) 1,125 Actual fixed overhead costs $ 5,100 Budgeted fixed overhead costs $ 5,625 Predetermined overhead rate ($2 variable $5 fixed) $ 7 What is the fixed overhead spending (budget) variance

Answer 1

The fixed overhead spending (budget) variance is $525 Favorable

Step-by-step explanation:

According to the given data we have the following:

Budgeted fixed overhead costs=$5,625

Actual fixed overhead costs=$5,100

Therefore, in order to calculate the Fixed overhead budget Variance we would have to use the following formula:

Fixed overhead budget Variance = Budgeted Fixed Overhead - Actual Fixed overhead

= $5,625 - $5,100 = $525 Favorable

The fixed overhead spending (budget) variance is $525 Favorable