Question

Pilot Manufacturing prepared a report and noted budgeted fixed overhead costs of $3.75 per unit at 1,400 units. In November, the managerial accountant incurred actual fixed overhead costs of $4,200 and the actual production was 1,400 units.

What is Pilot Manufacturing's fixed overhead budget variance for October?

Answer 1

$1,050 favorable

Step-by-step explanation:

The computation of the fixed overhead budget variance is shown below:

= Actual fixed overhead - budgeted fixed overhead

where,

Budgeted fixed overhead is

= $3.75 × 1,400 units

= $5,250

And, the actual fixed overhead is $4,200

So, the fixed overhead budget variance is

= $4,200 - $5,250

= $1,050 favorable

Since the budgeted fixed overhead is more than the actual one so it would be favorable