If actual fixed manufacturing overhead was $54,000 and there was a $1,300 unfavourable spending variance and a $1,000 unfavourable volume variance,what would budgeted fixed manufacturing overhead have been?
A)$50,300
B)$52,700
C)$53,000
D)$56,300

Question

Quizplus · Accepted Answer

Budgeted fixed manufacturing overhead can be calculated by adjusting the actual fixed manufacturing overhead for the variances. The actual fixed manufacturing overhead was $54,000, with a $1,300 unfavourable spending variance (meaning actual was higher than budgeted by $1,300) and a $1,000 unfavourable volume variance (meaning the company produced less than expected, affecting overhead absorption). To find the budgeted amount, subtract the unfavourable spending variance from the actual overhead and ignore the volume variance for this calculation, as it affects the allocation of overhead, not the budgeted amount itself. Thus, $54,000 - $1,300 = $52,700.

If Actual Fixed Manufacturing Overhead Was $54,000 and There Was