Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs) as the activity base for overhead. The following information relates to Cuda's operations last year: What was Cuda's fixed manufacturing overhead budget variance?
A)$9,000 Favorable
B)$15,000 Unfavorable
C)$45,000 Favorable
D)$45,000 Unfavorable

Question

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs) as the activity base for overhead. The following information relates to Cuda's operations last year:  What was Cuda's fixed manufacturing overhead budget variance?
A)$9,000 Favorable 
B)$15,000 Unfavorable 
C)$45,000 Favorable 
D)$45,000 Unfavorable

Quizplus · Accepted Answer

The fixed manufacturing overhead budget variance is calculated as the difference between actual fixed manufacturing overhead costs and budgeted fixed manufacturing overhead costs. 
Actual fixed manufacturing overhead costs = $300,000 
Budgeted fixed manufacturing overhead costs = $315,000 
Fixed manufacturing overhead budget variance = Budgeted fixed manufacturing overhead costs - Actual fixed manufacturing overhead costs 
= $315,000 - $300,000 
= $15,000 unfavorable

Cuda Manufacturing Corporation Uses a Standard Cost System with Machine-Hours