Question

Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches

Branch Company provided the following information:
Standard fixed overhead rate
(SFOR) per direct labor hour $5.00
Actual fixed overhead $305,000
BFOH $300,000
Actual production in units 16,000
Standard hours allowed for
actual units produced (SH) 64,000
Required
Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U).
Using the columnar approach, calculate the fixed overhead spending and volume variances.
1 2 3
Spending Volume

Answer 1

Fixed Overheads Spending Variance = $5,000 Unfavorable(U).

Fixed Overheads Spending Variance = $20,000 Favorable (F).

Step-by-step explanation:

Fixed Overheads Spending Variance = Actual Fixed Overheads - Budgeted Fixed Overheads

= $305,000 - $300,000

= $5,000 Unfavorable(U).

Fixed Overheads Spending Variance = Fixed Overheads at Actual Production - Budgeted Fixed Overheads

= ($5.00 × 64,000) - $300,000

= $320,000 - $300,000

= $20,000 Favorable (F)