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 Variable Overhead Static Budget Variance?
A) $1,050 favorable
B) $1,050 unfavorable
C) $2,550 favorable
D) $2,550 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 Variable Overhead Static Budget Variance?
A) $1,050 favorable 
B) $1,050 unfavorable 
C) $2,550 favorable 
D) $2,550 unfavorable 
E) None of the above

Quizplus · Accepted Answer

Budgeted Variable Overhead Cost: 800 hours x $30/hour = $24,000
Actual Direct Labor Cost: $22,950
Static Budget Variance (Actual - Budgeted): $22,950 - $24,000 = $1,050 Favorable

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

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