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

Budget variance = Actual fixed overhead - Budgeted fixed overhead
= $615,000 - (50,000 MHs × $12 per MH)
= $615,000 - $600,000
= $15,000 U

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