Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units: Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are:
$\begin{array} { l l l } \text { Fixed } & \$ 6.00 & \ \text { Variable } & 10.00 & \$ 16.00 \\
\text { Units actually produced in current month } & 9,000 \text { units } \
\text { Actual factory overhead costs incurred } & \
\text { (includes } \$ 70,000 \text { fixed) } & \$ 156,000 \
\text { Actual direct labor hours } & 9,000 \text { hours }\end{array}$

What is the fixed overhead spending variance for Alumni?
A)$10,000 (U)
B)$6,000 (U)
C)$4,000 (F)
D)$-0-

Question

Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units: Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are:
$\begin{array} { l l l } \text { Fixed } & \$ 6.00 & \ \text { Variable } & 10.00 & \$ 16.00 \\
\text { Units actually produced in current month } & 9,000 \text { units } \
\text { Actual factory overhead costs incurred } & \
\text { (includes } \$ 70,000 \text { fixed) } & \$ 156,000 \
\text { Actual direct labor hours } & 9,000 \text { hours }\end{array}$

What is the fixed overhead spending variance for Alumni?
A)$10,000 (U)
B)$6,000 (U)
C)$4,000 (F)
D)$-0-

Quizplus · Accepted Answer

Fixed overhead spending variance = (Standard fixed overhead rate * Actual direct labor hours) - Fixed overhead incurred= ($6.00 * 9,000 hours) - $70,000= $54,000 - $70,000= $10,000 (U)

Alumni Manufacturing Company Has the Following Information Pertaining to a Normal