Answer the following questions using the information below:
Jenny's Corporation manufactured 25,000 grooming kits for horses during March. The fixed-overhead cost-allocation rate is $20.00 per machine-hour. The following fixed overhead data pertain to March:

-What is the fixed overhead spending variance?
A)$1,000 unfavorable
B)$2,000 favorable
C)$3,000 unfavorable
D)$5,000 favorable

Question

Answer the following questions using the information below:
Jenny's Corporation manufactured 25,000 grooming kits for horses during March. The fixed-overhead cost-allocation rate is $20.00 per machine-hour. The following fixed overhead data pertain to March:
 
-What is the fixed overhead spending variance?
A)$1,000 unfavorable 
B)$2,000 favorable 
C)$3,000 unfavorable 
D)$5,000 favorable

Quizplus · Accepted Answer

To find the fixed overhead spending variance, we need to compare the actual fixed overhead cost to the budgeted fixed overhead cost.

Actual fixed overhead cost = $15,000 + $12,000 + $10,000 = $37,000

Budgeted fixed overhead cost = $20.00 x 2,000 machine hours = $40,000

Fixed overhead spending variance = Actual fixed overhead cost - Budgeted fixed overhead cost 
= $37,000 - $40,000 
= -$3,000

Since the actual fixed overhead cost is less than the budgeted fixed overhead cost, the variance is unfavorable. Hence, the answer is option C.

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