The standard costs and actual costs for factory overhead for the manufacture of

Question

The standard costs and actual costs for factory overhead for the manufacture of 2,729 units of actual production are as follows:

Standard Costs

Fixed overhead (based on 10,000 units)        3 hours @ $0.80 per hour

Variable overhead                                               3 hours @ $1.90 per hour

Actual Costs

Total variable cost, $17,978

Total fixed cost, $8,082

Determine the amount of fixed factory overhead variance.

Select the correct answer.

a. $1,532 favorable

b. $1,532 unfavorable

c. $3,955 unfavorable

d. $2,423 unfavorable

Explanation / Answer

fixed factory overhead variance = SH*SR - AH*AR

fixed factory overhead variance = 2729*3*0.80 - 8082

Fixed factory overhead variance = 1532.40 Unfavorable

Answer:

b. $1,532 unfavorable

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