Fletcher Company collected the following data regarding production of one of its products. Compute the fixed overhead cost variance. $\begin{array}{lll}
\text { Direct labor stendard (2 hrs. @ } \$ 12.75 / \mathrm{hr} \text {.) } & \$ 25.50 &\text {per finished unit}\
\text { Actual direct labor hours } & 81,500&\text { hrs}\
\text { Budgeted units } & 42,000&\text {units}\
\text {Actual finished units produced}&40,000&\text {units}\
\text {Standad variable OH rate (2 hrs. @ \$14.30/hr)}&\$28.60&\text {per finished unit}\
\text {Standard fixed OH rate $ (\$ 336,000 / 42,000 $ units)}&\$8.00 &\text {per unit}\
\text {Actual cost of variable overhead costs incurred}&\$1,140,000\
\text {Actual cost of fixed overhead costs incurred} &\$ 338,000
\end{array}$
A) $18,000 unfavorable.
B) $18,000 favorable.
C) $18,300 favorable.
D) $14,300 unfavorable.
E) $18,300 unfavorable.

Question

Fletcher Company collected the following data regarding production of one of its products. Compute the fixed overhead cost variance. $\begin{array}{lll}
\text { Direct labor stendard (2 hrs. @ } \$ 12.75 / \mathrm{hr} \text {.) } & \$ 25.50 &\text {per finished unit}\
\text { Actual direct labor hours } & 81,500&\text { hrs}\
\text { Budgeted units } & 42,000&\text {units}\
\text {Actual finished units produced}&40,000&\text {units}\
\text {Standad variable OH rate (2 hrs. @ \$14.30/hr)}&\$28.60&\text {per finished unit}\
\text {Standard fixed OH rate $ (\$ 336,000 / 42,000 $ units)}&\$8.00 &\text {per unit}\
\text {Actual cost of variable overhead costs incurred}&\$1,140,000\
\text {Actual cost of fixed overhead costs incurred} &\$ 338,000 
\end{array}$  
A) $18,000 unfavorable.
B) $18,000 favorable.
C) $18,300 favorable.
D) $14,300 unfavorable.
E) $18,300 unfavorable.

Quizplus · Accepted Answer

Fixed overhead cost variance = (Actual fixed overhead cost - Budgeted fixed overhead cost)= (338,000 - (8 * 42,000))= (338,000 - 336,000)= $18,000 unfavorable

Fletcher Company Collected the Following Data Regarding Production of One