Blue Gum Ltd uses a standard costing system. The firm estimates that it will ope
ID: 2565252 • Letter: B
Question
Blue Gum Ltd uses a standard costing system. The firm estimates that it will operate its manufacturing facilities at 296,000 machine hours for the year. The estimate for total budgeted overhead is $784,000. The standard variable overhead rate is estimated to be $3.7 per machine hour or 11.1 per unit. The actual data for the year are presented below:
Actual units produced
406,000
Actual machine hours
370,000
Actual variable overhead
750,000
Actual fixed overhead
318,000
Calculate and enter the amount of fixed overhead budget variance in the answer space below: (Show negative sign in front of input if the variance is favourable)
Actual units produced
406,000
Actual machine hours
370,000
Actual variable overhead
750,000
Actual fixed overhead
318,000
Explanation / Answer
Solution :- Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead.
= 784000 - 318000
= $ 466000 (Favourable)
Conclusion :- Fixed overhead budget variance = $ 466000 (Favourable).
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