The Chase Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard machine-hours. For November, the company's flexible budget for manufacturing overhead showed the following total budgeted costs at the denominator activity level of 40,000 machine-hours: During November 42,000 machine-hours were used to complete 13,200 units of product with the following actual overhead costs: The standard time allowed to complete one unit of product is 3.6 machine-hours.
-The fixed manufacturing overhead budget variance for November was:
A)$2,970 unfavorable
B)$4,550 favorable
C)$7,520 favorable
D)$22,900 unfavorable

Question

The Chase Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard machine-hours. For November, the company's flexible budget for manufacturing overhead showed the following total budgeted costs at the denominator activity level of 40,000 machine-hours: During November 42,000 machine-hours were used to complete 13,200 units of product with the following actual overhead costs: The standard time allowed to complete one unit of product is 3.6 machine-hours.
-The fixed manufacturing overhead budget variance for November was:
A)$2,970 unfavorable 
B)$4,550 favorable 
C)$7,520 favorable 
D)$22,900 unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
= $42,970 - $40,000 = $2,970 U

The Chase Company Uses a Standard Cost System in Which