Armstrong Products
Refer to the Armstrong Products information below.
Armstrong Products applies fixed overhead at a rate of $3 per direct labour hour. Each unit produced is expected to take 2 direct labour hours. Armstrong expected production in the current year to be 10 000 units but 9000 units were actually produced. Actual direct labour hours were 19 000 and actual fixed overhead costs were $62 000.
-Armstrong's fixed overhead spending variance is:
A) $8000 F
B) $8000 U
C) $2000 F
D) $2000 U

Question

Quizplus · Accepted Answer

Armstrong's fixed overhead spending variance can be calculated as follows: 
Actual Fixed Overhead Cost - Budgeted Fixed Overhead Cost 
=  $108,000 - $110,000 
= $2000 U 
Therefore, the best choice is D, which represents an unfavorable variance of $2000.

Armstrong Products Refer to the Armstrong Products Information Below