This answer results from calculating the fixed overhead spending (budget) variance as if it were the variable overhead spending variance: (Actual Cost per unit of $1.7777777 1 ? Budgeted Cost per unit of $1.80 2) × Actual Quantity of 15,750 = $(350) favorable. The fixed overhead spending (budget) variance is equal to the difference between the actual and budgeted amounts of fixed overhead. 1Actual cost of per unit of $1.7777777 is calculated as $28,000 ÷ 15,750. 2Budgeted cost per unit of $1.80 is calculated as $324,000 ÷ 180,000 or $27,000 ÷ 15,000.
The variance is unfavorable because the actual amount of fixed overhead is greater than the budgeted amount.
The fixed overhead spending (or budget) variance is equal to the difference between the actual and budgeted amounts of fixed overhead. The actual fixed overhead incurred was $28,000. The budgeted (static budget and flexible budget) amount of fixed overhead for the month was $27,000 ($324,000 ÷ 12). Thus, the fixed overhead spending (budget) variance is $1,000 unfavorable ($28,000 ? $27,000).
This answer results from calculating the fixed overhead spending (budget) variance as if it were the variable overhead spending variance but reversing actual and budgeted amounts per unit: (Budgeted Cost per unit of $1.80 1 ? Actual Cost per unit of $1.7777777 2) × Actual Quantity of 15,750 = $350 unfavorable. The fixed overhead spending (budget) variance is equal to the difference between the actual and budgeted amounts of fixed overhead. 1Budgeted cost per unit of $1.80 is calculated as $324,000 ÷ 180,000 or $27,000 ÷ 15,000. 2Actual cost per unit of $1.7777777 is calculated as $28,000 ÷ 15,750.
|
