Answer the following question(s)using the information below.Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September:

-A company had the following information pertaining to two different cases: The total fixed overhead variance in Case Y was
A)$4,000 unfavourable.
B)$4,000 favourable.
C)$10,000 unfavourable.
D)$12,000 favourable.
E)$12,000 unfavourable.

Question

Answer the following question(s)using the information below.Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September:
 
-A company had the following information pertaining to two different cases:  The total fixed overhead variance in Case Y was
A)$4,000 unfavourable. 
B)$4,000 favourable. 
C)$10,000 unfavourable. 
D)$12,000 favourable. 
E)$12,000 unfavourable.

Quizplus · Accepted Answer

First, we need to calculate the fixed overhead rate by dividing total fixed overhead cost by total machine hours:
($80,000 + $96,000)/4,200 machine hours = $40.95 per machine hour

Next, we can calculate the standard fixed overhead cost for each case:
Case X: 3,200 machine hours x $40.95 per machine hour = $131,040
Case Y: 3,000 machine hours x $40.95 per machine hour = $122,850

The actual fixed overhead cost and machine hours for each case are given, so we can calculate the fixed overhead variances:
Case X:
Actual fixed overhead cost - (Actual machine hours x Fixed overhead rate)
$82,000 - (3,000 machine hours x $40.95) = $-15,850 (favourable variance)

Case Y:
Actual fixed overhead cost - (Actual machine hours x Fixed overhead rate)
$78,000 - (3,200 machine hours x $40.95) = $-27,150 (favourable variance)

The question asks for the total fixed overhead variance in Case Y, which is the favourable variance of $27,150 minus the difference between the actual fixed overhead cost and the standard fixed overhead cost:
$27,150 - ($122,850 - $96,000) = $12,300 unfavourable variance

Therefore, the answer is E) $12,000 unfavourable.

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