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Question
Fletcher Company collected the following data regarding production of one of its products. Compute the fixed overhead cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.) $25.50 per finished unit
Actual direct labor hours 81,500 hrs.
Budgeted units 42,000 units
Actual finished units produced 40,000 units
Standard variable OH rate (2 hrs. @ $14.30/hr.) $28.60 per finished unit
Standard fixed OH rate ($336,000/42,000 units) $8.00 per unit
Actual cost of variable overhead costs incurred $1,140,000
Actual cost of fixed overhead costs incurred $338,000
A. $18,300 favorable.
B. $18,000 favorable.
C. $18,000 unfavorable.
D. $18,300 unfavorable.
E. $14,300 unfavorable.
Answer
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Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead spending variance.
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Actual finished units produced 40,000 units
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Actual direct labor hours 81,500 hrs.
Actual finished units produced 40,000 units
Actual cost of direct labor $1,100,250
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Actual cost of direct materials used $483,570
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C. Total variable cost decreases, total fixed cost remains constant.
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