Question

Wave Fashions uses standard costs for its manufacturing division. The allocation base for overhead costs is direct labor hours. From the following​ data, calculate the total fixed overhead variance.

Actual fixed overhead $ 36,000
Budgeted fixed overhead $ 27,000
Allocated fixed overhead $ 28,000
Standard overhead allocation rate $ 7.00
Standard direct labor hours per unit 2 DLHr
Actual output 2,000 units
a. $ 14,000 F
b. $ 10, 600 F
c. $ 14,000 U
d. $ 10, 600 U

Answer 1

$9,000 U

Step-by-step explanation:

Fixed Overhead Total Variance is the difference between actual and absorbed fixed production overheads during a period.

Fixed overhead variance = Actual Overhead - Budgeted Overhead

Fixed overhead variance = $36,000 - $ 27,000

Fixed overhead variance = $9,000 U