Robert Inc. uses the standard costing method. The company\'s main product is a f

Question

Robert Inc. uses the standard costing method. The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce. Normal annual capacity is 5,000 direct labor hours, and budgeted fixed overhead costs for the year were $8,750. During the year, the company produced and sold 5,800 units. Actual fixed overhead costs were $6,000.

Using the information provided for Robert Inc, compute the fixed overhead budget variance.

$3,675 (U)

$2,750 (F)

$925 (U)

$5,800 (U)

$3,675 (U)

$2,750 (F)

$925 (U)

$5,800 (U)

Explanation / Answer

Budgeted Fixed Overhead for actual production = 5800*0.50*8750/5000 i.e 5075

Actual Fixed Overhead = 6000

Variance = Standard Overhead For actual Output - Actual Overhead

= 5075 -6000 i.e 925 Unfavourable

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