Rainbolt Incorporated makes a single product-an electrical motor used in many long-haul trucks. 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) $20,000 U
B) $400 U
C) $20,000 F
D) $400 F

Question

Rainbolt Incorporated makes a single product-an electrical motor used in many long-haul trucks. 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) $20,000 U 
B) $400 U 
C) $20,000 F 
D) $400 F

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead − Budgeted fixed overhead
= $363,000 − $343,000 = $20,000 U

Rainbolt Incorporated Makes a Single Product-An Electrical Motor Used in Many