The following information is available for Baxter Manufacturing for April:
$\begin{array}{lrr}
\text { Actual machine hours } &840\
\text { Standard machine hours allowed} &900\
\text { Denominator activity (machine hours) } &1,000\
\text {Actual fixed overhead costs } &\$3,800\
\text { Budgeted fixed overhead costs } &\$4,000\
\text { Predetermined overhead rate ( $ \$ 1 $ variable $ +\$ 4 $ fixed) } &\$\quad5\
\end{array}$

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Is the fixed overhead price (spending) variance for April favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Question

The following information is available for Baxter Manufacturing for April:
$\begin{array}{lrr}
  \text { Actual machine hours } &840\
 \text {  Standard machine hours allowed} &900\
 \text { Denominator activity (machine hours) } &1,000\
 \text {Actual fixed overhead costs  } &\$3,800\
 \text { Budgeted fixed overhead costs } &\$4,000\
 \text { Predetermined overhead rate ( $ \$ 1 $ variable $ +\$ 4 $ fixed) } &\$\quad5\
\end{array}$

-
Is the fixed overhead price (spending) variance for April favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Quizplus · Accepted Answer

The fixed overhead price (spending) variance is favorable because the actual fixed overhead costs are less than the budgeted fixed overhead costs.

The Following Information Is Available for Baxter Manufacturing for April