(Appendix 10A) Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

-The fixed overhead budget variance is:
A) $57,675 U
B) $15,000 F
C) $15,000 U
D) $57,675 F

Question

(Appendix 10A) Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
 
-The fixed overhead budget variance is:
A) $57,675 U 
B) $15,000 F 
C) $15,000 U 
D) $57,675 F

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead
= $185,700 - $170,700 = $15,000 U

(Appendix 10A) Arca Incorporated Makes a Single Product--A Critical Part