HSS Company provides security services to senior executives of prominent corporations when they travel outside the United States. HSS applies both fixed and variable overhead using direct labor hours. The annual budget for one if its customers is as follows:
During the year, HSS had the following activity related to this customer:
$\bullet$Actual hours were 850 at a total cost of $44,200.
$\bullet$Actual fixed overhead was $12,750.
$\bullet$Actual variable overhead was $22,950.
What is the overall Static Budget Variance?
A) $1,700 favorable
B) $1,700 unfavorable
C) $4,200 favorable
D) $4,200 unfavorable
E) None of the above

Question

HSS Company provides security services to senior executives of prominent corporations when they travel outside the United States. HSS applies both fixed and variable overhead using direct labor hours. The annual budget for one if its customers is as follows:
 During the year, HSS had the following activity related to this customer:
$\bullet$Actual hours were 850 at a total cost of $44,200.
$\bullet$Actual fixed overhead was $12,750.
$\bullet$Actual variable overhead was $22,950.
What is the overall Static Budget Variance?
A) $1,700 favorable 
B) $1,700 unfavorable 
C) $4,200 favorable 
D) $4,200 unfavorable 
E) None of the above

Quizplus · Accepted Answer

Budgeted Direct Labor Cost: 800 hours x $50/hour = $40,000
Actual Direct Labor Cost: $44,200
Static Budget Variance (Actual - Budgeted): $44,200 - $40,000 = $4,200 Unfavorable

HSS Company Provides Security Services to Senior Executives of Prominent ∙\bullet∙

HSS Company Provides Security Services to Senior Executives of Prominent $\bullet$