Schenley Manufacturing builds playground equipment that it sells to elementary s

Question

Schenley Manufacturing builds playground equipment that it sells to elementary schools and municipalities. Schenley's management has contracted you to perform a variance analysis on the fixed manufacturing overhead for its line of slides. Schenley's cost accounting team informs you that it allocates fixed overhead based on machine hours. This period production was budgeted at 30 slides. Budgeted and actual production data follows: $11 Standard fixed overhead cost per machine hour Standard machine hours per slide Actual production Actual fixed overhead cost 290 $22,500 What is the fixed manufacturing overhead budget variance in this period? OA. $21,840 favorable O B. $21,840 unfavorable OC. $5,720 favorable OD, $5,720 unfavorable

Explanation / Answer

Fixed manufacturing overhead budget variance = Actual Fixed Overhead - Budgeted Fixed Overhead
= $22,500 - $11 x 30 x 2 = $21,840 unfavorable

Option B. $21,840 unfavorable is correct answer.

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