Standard Corporation has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor-hours (DLHs) as follows: Standard overhead costs per unit:
Variable portion: 2 DLHs × $3 per DLH = $6
Fixed portion: 2 DLHs × $5 per DLH = $10
The following data pertain to operations in April:
The fixed manufacturing overhead budget variance for April was:
A) $40,000 Unfavorable
B) $40,000 Favorable
C) $60,000 Favorable
D) $60,000 Unfavorable

Question

Standard Corporation has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor-hours (DLHs) as follows: Standard overhead costs per unit:
Variable portion: 2 DLHs × $3 per DLH = $6
Fixed portion: 2 DLHs × $5 per DLH = $10
The following data pertain to operations in April:
 The fixed manufacturing overhead budget variance for April was:
A) $40,000 Unfavorable 
B) $40,000 Favorable 
C) $60,000 Favorable 
D) $60,000 Unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead − Budgeted fixed overhead
= $860,000 − $900,000
= $40,000 F

Standard Corporation Has Developed Standard Manufacturing Overhead Costs Based on a Capacity