Question

Standard variable overhead rate $2 per machine hour Standard fixed overhead rate $1 per machine hour Actual variable overhead costs $390,000 Actual fixed overhead costs $175,000 Budgeted fixed overhead costs $190,000 Standard machine hours per unit produced 10 Good units produced 18,000 Actual machine hours 200,000 Using the above information provided for Underfoot Products, compute the fixed overhead budget variance.

Answer 1

Fixed overhead budget variance = $15,000 favorable

Step-by-step explanation:

The fixed overhead budget variance is the difference between the budgeted fixed overhead expenditure and the actual fixed overhead for a given period of time.

Where the actual amount of expenditure exceeds the budgeted it is unfavorable variance, a favorable variance implies the opposite.

$

Budgeted fixed overhead 190,000

Actual fixed overhead 175,000

Budget Variance 15,000 favorable

Fixed overhead budget variance = $15,000 favorable