Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}
\text { STANDARD COST CARD}\
\text { PER UNIT}\
\begin{array}{llc}
\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \
\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \
\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \
\text { Fixed overhead } & & ?& \
\text { Total standard cost per unit } & &?
\end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}
\text { Units produced } & 10,500 \
\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \
& \
\text { Overhead incurred: } & £ 182,000 \
\text { Variable } & £ 430,000
\end{array}$
-Refer to Figure 17-8. Noelle's fixed overhead spending variance would be
A)£10,000 unfavourable.
B)£11,000 unfavourable.
C)£21,000 favourable.
D)£31,000 favourable.

Question

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}
\text { STANDARD COST CARD}\
\text {  PER UNIT}\
\begin{array}{llc}
\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \
\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \
\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \
\text { Fixed overhead } & & ?&   \
\text { Total standard cost per unit } & &? 
\end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}
\text { Units produced } & 10,500 \
\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \
& \
\text { Overhead incurred: } & £ 182,000 \
\text { Variable } & £ 430,000
\end{array}$ 
-Refer to Figure 17-8. Noelle's fixed overhead spending variance would be
A)£10,000 unfavourable.
B)£11,000 unfavourable.
C)£21,000 favourable.
D)£31,000 favourable.

Quizplus · Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. The budgeted fixed overhead costs are given as £420,000. The actual fixed overhead costs can be determined from the total overhead incurred (£430,000) minus the variable overhead (£182,000), which equals £248,000. The spending variance is £420,000 (budgeted) - £248,000 (actual) = £172,000 favourable, which is not an option provided. However, the correct calculation should be based on the actual fixed overhead costs provided directly or indirectly in the question. Since the provided information and calculations do not directly lead to the correct answer, let's correct the approach:The actual fixed overhead is not directly given, but the total overhead incurred is £430,000, which includes both fixed and variable components. The variable overhead can be calculated based on the information given for variable overhead rate (£6 per hour) and the actual direct labour hours (29,000 hours), which equals £174,000 (£6 * 29,000). Therefore, the actual fixed overhead is the total overhead incurred minus the variable overhead: £430,000 - £174,000 = £256,000. The fixed overhead spending variance is then the actual fixed overhead (£256,000) minus the budgeted fixed overhead (£420,000), which equals a £164,000 favourable variance, which again does not match any of the provided options.Given the discrepancy in calculations and the provided options, it seems there was a misunderstanding in the calculation process. The correct approach to find the fixed overhead spending variance is to compare the budgeted fixed overhead costs with the actual fixed overhead costs. Without clear information on the actual fixed overhead costs from the provided data, we cannot accurately calculate the variance based on the given options. The correct answer should be derived from understanding that the spending variance is the difference between what was actually spent on fixed overhead and what was budgeted. Since the provided calculations and options do not align with the expected calculation method, there might be a mistake in interpreting the question or the options provided.

Figure 17-8 the Following Information Was Extracted from the Accounting

Figure 17-8
the Following Information Was Extracted from the Accounting