Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below:
-Franklin's fixed manufacturing overhead budget variance for the year is:
A)$19,000 favorable
B)$25,000 favorable
C)$25,000 unfavorable
D)$19,000 unfavorable

Question

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below: 
-Franklin's fixed manufacturing overhead budget variance for the year is:
A)$19,000 favorable 
B)$25,000 favorable 
C)$25,000 unfavorable 
D)$19,000 unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
= $575,000 - $600,000 = $25,000 F

Franklin Glass Works Uses a Standard Cost System in Which