Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:

DLH per unit 2.20

Variable overhead per DLH $2.50

Fixed overhead per DLH

Budgeted variable overhead $3.00

(based on 11,990 DLHs)

Actual:
Units produced 4,400

Direct labor hours 8,800

Variable overhead $29,950

Fixed overhead $42,300

Refer to Pearce Company Using the four-variance approach,what is the fixed overhead spending variance? A)$15,900 U B)$6,330 U C)$6,930 U D)$935 F

Question

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Refer to Pearce Company Using the four-variance approach,what is the fixed overhead spending variance? A)$15,900 U B)$6,330 U C)$6,930 U D)$935 F

Quizplus · Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead and the budgeted (or standard) fixed overhead. However, the information provided does not directly give the budgeted fixed overhead, making it impossible to calculate the fixed overhead spending variance with the given data. Therefore, without the budgeted fixed overhead amount, we cannot accurately determine the fixed overhead spending variance. The choice provided as correct (B) is based on an assumption or a mistake since the necessary information to calculate this variance is not provided in the question.

Pearce Company Pearce Company Uses a Standard Cost System for Its Production