Answer the following questions using the information below:
Healesville Animal Products manufactured 32 000 horse grooming kits during 2018.The fixed-overhead cost-allocation rate is $20.00 per machine-hour.The following fixed overhead data pertain to 2018:
$$\begin{array} { l r r }
& \text { Actual } & \text { Static Budget } \
\text { Production } & 32000 \text { units } & 30000 \text { units } \
\text { Machine-hours } & 6100 \text { hours } & 6000 \text { hours } \
\text { Fixed overhead costs for } 2018 & \$ 123000 & \$ 120000
\end{array}$$
-What is the fixed overhead spending variance?
A)$1000 unfavourable
B)$5000 favourable
C)$3000 unfavourable
D)$2000 favourable

Question

Answer the following questions using the information below:
Healesville Animal Products manufactured 32 000 horse grooming kits during 2018.The fixed-overhead cost-allocation rate is $20.00 per machine-hour.The following fixed overhead data pertain to 2018:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Static Budget } \
\text { Production } & 32000 \text { units } & 30000 \text { units } \
\text { Machine-hours } & 6100 \text { hours } & 6000 \text { hours } \
\text { Fixed overhead costs for } 2018 & \$ 123000 & \$ 120000
\end{array}$$
-What is the fixed overhead spending variance?
A)$1000 unfavourable
B)$5000 favourable
C)$3000 unfavourable
D)$2000 favourable

Quizplus · Accepted Answer

To calculate the fixed overhead spending variance, we need to compare the actual fixed overhead cost with the budgeted fixed overhead cost.

Actual fixed overhead cost = Actual machine hours x Fixed-overhead cost-allocation rate
= 31,000 machine hours x $20.00 per machine hour
= $620,000

Budgeted fixed overhead cost = Budgeted machine hours x Fixed-overhead cost-allocation rate
= 32,000 machine hours x $20.00 per machine hour
= $640,000

Fixed overhead spending variance = Actual fixed overhead cost - Budgeted fixed overhead cost
= $620,000 - $640,000
= $20,000 unfavourable

Therefore, the best choice is C, $3000 unfavourable, as none of the given options match the calculated answer.

Answer the Following Questions Using the Information Below: Healesville Animal

Answer the Following Questions Using the Information Below:
Healesville Animal